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Introduction
The Ready-Made Garments (RMG) industry occupies a unique position in the Bangladesh economy. It is the largest exporting industry in Bangladesh, which experienced phenomenal growth during the last 20 years. By taking advantage of an insulated market under the provision of Multi Fiber Agreement (MFA) of GATT, it attained a high profile in terms of foreign exchange earnings, exports, industrialization and contribution to GDP within a short span of time. The industry plays a key role in employment generation and in the provision of income to the poor. Nearly two million workers are directly and more than ten million inhabitants are indirectly associated with the industry. Over the past twenty years, the number of manufacturing units has grown from 180 to over 4000. The sector has also played a significant role in the socio-economic development of the country. The quota came to an end at 2004 but it continued to show robust performance, competitive strength and, of no less importance, social commitment. RMGs contribution to Bangladesh economy is well-known, well-appreciated and wellrespected. Garments industry is the largest export industry for our country and it contributes 75% of total export. The industry is associated with its strength, weakness, threat and opportunity. In 2005-06 the industry faced a great instability due to the protest of the worker. After that under the state of emergency the sector enjoyed a stable growth and finally reaches at the matured stage. In this study an attempt has been made to describe the overall scenario of Bangladesh Ready Made Garments sector and Al-Muslim Group has been chosen to describe the mechanism of business in this industry. At this time of free economy everyone may be interested to know about the largest export industry and the mechanism of doing business here. The present study has been undertaken with consideration of this fact.
Methodology
Sources of data
Data regarding the completion of this report are collected from both primary and secondary sources. i. Primary source: Direct conversation with the respective officers of the company.
Secondary sources: Various data source like Bangladesh bank, Export Promotion Bureau Internet Browsing Annual report of the company Different published material. Such as books and articles.
Analysis of data
For analyzing the collected data different statistical tools are used. For showing the trend of export, contribution of export to GDP, time series analysis has been used. For determining the significance of RMG export and Total export simple regression analysis has been used. For measuring the significance of profit and commission simple regression analysis has been used. For showing the profit trend of Al-Muslim Group time series analysis has been used. For analyzing the performance of Al-Muslim Group ratio analysis has been done.
Limitation
1. In many cases, up to date information was not published. 2. In some cases, access to relevant papers and documents were strictly prohibited. 3. In some other cases, access was denied to procedural matters conducted directly by the top management in the operations of foreign exchange business.
CHAPTER :2
risks; horizontal as well as vertical coordination can be easily found in such group activities. Ready-made garments manufactured in Bangladesh are divided mainly into two broad categories: woven and knit products. Shirts, T-shirts and trousers are the main woven products and undergarments, socks, stockings, T-shirts, sweaters and other casual and soft garments are the main knit products. Woven garment products still dominate the garment export earnings of the country. The share of knit garment products has been increasing since the early 1990s; such products currently account for more than 40 per cent of the countrys total RMG export earnings (BGMEA website). Although various types of garments are manufactured in the country, only a few categories, such as shirts, T-shirts, trousers, jackets and sweaters, constitute the major production-share (BGMEA website; and Nath, 2001). Economies of scale for large-scale production and export-quota holdings in the corresponding categories are the principal reasons for such a narrow product concentration. Foreign buyers are concerned about the different compliance of law. So, they were bothered about the child labor issue of Bangladesh. But later on this problem is salute and now garments are restricted to employ child labor. In 2005 the quota facilities for Bangladesh was withdrawn. Everybody thought it would be a great shock for garments industry. But in reality Bangladesh has faced this challenge with great courage. The fact is that the export of garments product has increased after the withdrawn of this quota. And the last two years were really good time for garment industry. The political situation was stable under the countrys state of emergency and this boost the growth of the industry.
years because of a stable business climate under the country's state of emergency. The nation's exports of knitted and woven items rose by nearly 17 percent to a record 10.7 billion dollars in the financial year to June 2008. And now the industry is at the matured stage.
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Bangladesh is a member of Multilateral Investment Guarantee Agency (MIGA) under which protection and safety measures are available. Adjudication service of the International Centre for the Settlement of Investment Dispute (ICSID) offered. Excellent Tele-communications network of E-mail, Internet, Fax, ISD, NWD & Cellular services. Weakness of currency against dollar and the condition will persist to help exporters Bank interest@ 7% for financing exports Convenience of duty free custom bonded w/house Readiness of new units to enhance systems and create infrastructure accordant with product growth and fast reactions to circumstances
Weakness
Lack of marketing tactics Absence of easily on-hand middle management A small number of manufacturing methods Low acquiescence: there is an international pressure group to compel the local producers and the government to implement social acquiescence. The US GSP may be cancelled and purchasing from US & EU may decrease significantly M/c advancement is necessary. The machinery required to assess add on a garment or increase competence are missing in most industries. Lack of training organizations for industrial workers, supervisors and managers. Autocratic approach of nearly all the investors Fewer process units for textiles and garments Sluggish backward or forward blending procedure Incompetent ports, entry/exit complicated and loading/unloading takes much time Speed money culture 11
Time-consuming custom clearance Unreliable dependability regarding Delivery/QA/Product knowledge Communication gap created by incomplete knowledge of English Subject to natural calamities
Opportunity
EU is willing to establish industry in a big way as an option to china particularly for knits, including sweaters Bangladesh is included in the Least Developed Countries with which US is committed to enhance export trade Sweaters are very economical even with china and is the prospect for Bangladesh If skilled technicians are available to instruct, prearranged garment is an option because labor and energy cost are inexpensive. Foundation garments for Ladies for the FDI promise is significant because both, the technicians and highly developed machinery are essential for better competence and output Japan to be observed, as conventionally they purchase handloom textiles, home furniture and garments. This section can be encouraged and expanded with continued progress in quality.
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Threat
The exporters have to prepare themselves to harvest the advantages offered by the opportunities.
(Tk in million) Amount 3812.00 6218.00 13078.00 27008.00 80.00 22.00 10619.00 3058.00 2681.00 15411.00 43368.00
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Contribution to Economy
The Ready-Made Garments (RMG) industry contributes to the Bangladesh economy in a distinctive manner. The last 20 years witnessed unparalleled growth in this sector, which is also the largest exporting industry in Bangladesh. It has attained a high profile in terms of foreign exchange earnings, exports, industrialization and contribution to GDP within a short span of time. The industry plays a significant role in terms of employment generation. Nearly two million workers are directly and more than ten million inhabitants are indirectly associated with the industry. In addition to its economic contribution, the expansion of RMG industry has caused noticeable changes by bringing more than 1.12 million women into the workforce. Hence it is quite apparent that this sector has played a massive role in the economic development of the country. RMGs contribution in terms of GDP is highly remarkable; it has reached 13 percent of GDP which was only about 3 percent in 1991. It also plays a pivotal role to promote the development of other key sectors of the economy like banking, insurance, shipping, hotel, tourism, road transportation, railway container services, etc. One of the key advantages of the RMG industry is its cheap labor force, which provides a competitive edge over its competitors. The sector has created employment opportunities for about two million people of which 70 percent are women who mostly come from rural areas. Thus the industry helps in the countrys social development, women empowerment and poverty alleviation. Currently RMG earns the lion's share of foreign exchange earnings.
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Macro contribution
13.25% of GDP
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RMG sector is one of the major employers in the economy. Around three million people are employed in RMG industry and about 70 per cent of which are women. As a matter of fact in the 1990s a large part of the incremental labor force in the manufacturing sector was absorbed by the RMG sector. The RMG workers received USD 315.25 million as their wage in FY 2007. This purchasing power contributed significantly to the growth of the economy through its multiplier impact in terms of consumption expenditure and savings.
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The RMG sector has also contributed to the growth of the countrys insurance sector. On average, every year the premium paid by the RMG sector to the insurance companies was about 6 million dollars. All firms have their machines and plants insured and, additionally, 87% of importers of input and 15% of the RMG exporters get their imports/exports insured.
Transport Communication
The growth and development of inland transport services to a considerable extent owe to the growth of the RMG industry. Both wheel transport service and railway service are widely used by RMG sector for activities related to manufacturing and cargo movement. The concept of covered van emerged in Bangladesh for safe transportation of the RMG products in particular. In 2007 the inland transport industry received about 55.27 million dollars as revenue from the RMG sector.
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Professional Services
The RMG sector extensively uses professional services from CA firms, legal agencies, and business consultants. In FY 2007 total payment for professional services is estimated at 7.37 million dollars.
Engineering Sector
The RMG industry paid 28.55 million dollars to the engineering sector which included payments to repairing and maintenance service industry (USD 8.29 million), electrical engineering (USD 9.21 million), transport vehicle maintenance service ( USD 5.53 Million), and machine tools service (USD 5.52 Million).
Utility Services
Payment of Electricity bill by the RMG industry is estimated to be 29.47 million dollars in FY2002. Utility payments for gas, WASA etc. amounted to an additional 7.37 million dollars.
Real Estate
Demand for real estate development by the garment industry to accommodate offices and factories of over 4000 garment units has generated a lot of activities in the Construction Industry. The RMG industries paid approximately 52.50 million dollars as factory, office and garage rent in FY 2007.
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Savings
Regular earning enables a large number of the garment workers to go for some savings. Workers investments on family pension schemes etc. create savings. A BIDS
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survey conducted in the early 1990s found that 21 percent of both male and female workers aged 15 years and above had their own bank accounts. A higher proportion of workers (30 percent) had bank accounts in the EPZ. Findings showed that women are on average better savers than men and save about 7.6 percent of their otherwise small income. Child Labor
In recent years, international debate on child labor has intensified. The elimination of child labor is also among the core labor standards in the ILO Convention. The Harkin Bill placed at the US Senate entitled The Child Labor Deterrence Act of 1993 which called for the elimination of child labor in the export oriented manufacturing and mining industries. As a consequence many garment industries had to retrench child workers from their factories. In many countries these retrenched children ended up in more strenuous and less-remunerative jobs, or worst, turned to begging in the street. The Bangladesh RMG sector set a unique example through collective efforts which eventually led to the development of a safety-net program for the child labors. The BGMEA/ILO/ UNICEF Child Labor Project in the garment industry of Bangladesh, funded by the US Development of Labor was the first of a series of child labor programs executed by the International Program on the Elimination of Child Labor of the ILO. This project, initiated in 1995, is based on a Memorandum of Understanding (MOU) signed by the BGMEA and two international organizations, the ILO and UNICEF, with the aim of progressively phasing out child labor from more than 2,500 factories that are members of the association. The key elements of the MOU were: (a) A fact-finding survey to determine the extent of child labor in the garment industry; (b) The establishment of an education program in which identified child workers should be enrolled; (c) The establishment of a monitoring and verification system; (d) The provision of income compensation in the farm of a monthly stipend of Tk. 300, the equivalent of (at that time) US$ 7. The costs are to be shared by on fifty-fifty basis by BGMEA, the ILO and other donors. 21
Many of the retrenched child workers have been placed in schools and are receiving a monthly stipend. Football manufacturing industry of Pakistan has been following the globally acclaimed BGMEA Model of Child Labor Elimination. BGMEA has so far spent over 600,000 US dollars for the project. Successfully addressing of this issue has created a very favorable image about Bangladesh abroad and has promised continued market access for the sector.
Population Control
Employment opportunities especially for women created positive impact on family planning and population control in the country. Independent working-women are getting more conscious about the advantage of a small family, and are exposed to modern family planning methods. Working adolescent girls tend to avoid early marriage as they have their own source of income and are self-dependent. The mean age at marriage for girls working in RMG factories tend to be higher than the national average.
Women workers are particularly deprived of their special legal rights (e. g. maternity benefits) and remain more exposed to exploitation within their particular spheres of work. The female workers tend to be underpaid and exposed to physical assault by both fellow colleagues and employers.
Results of a study for ILO re-confirmed us the absence of decent work in most of the RMG industries as they offer low wage, long working hours, poor health and safety protection and in most cases there is no formal contract for job security and social protection.
The national labor movements are continuously demanding for National Minimum Wage. The minimum wages rule for the garment sector, endorsed in 2006. The minimum wage is Tk 1650.
No formal appointment letter is issued to the employees contractually defining their terms of employment. In most cases the industries do not follow proper dismissal procedure for their workers. Since the workers do not get any formal contract, the employers can hire and fire them at any time without showing any reason.
The exhaustive and prolonged work schedule of RMG industries sometimes causes occupational disease among the workers, which ultimately impacts negatively on their productivity.
The recent collapse of a garment factory building at Savar shows how insecure and vulnerable the workers are in the RMG sector. Therefore it is now urgent to improve OSH condition at workplaces for the business interest of the RMG owner in quota free market.
Bangladesh does not have any national social safety net program like contributory provident fund, medical allowances, unemployment allowances etc. Small and one time retrenchment benefits are not adequate for workers and their families in situations of massive income losses. In most cases the
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workers do not have their own savings and are not prepared to face any adverse situation. Though export-oriented apparel industry is the lifeblood of Bangladeshs foreign exchange earning, the basic rights, welfare issues of garment workers are severely neglected. The basic problem of the ordinary workers and labor movement in garments sector are low scope of operation, non-recognition of legally registered unions at the factory level, long working hours and practically no weekly holiday that left hardly anytime for workers to participate union activities, non-compliance of existing labor laws, high occupational accidents etc. On the other hand, creation of yellow trade unions by the garments owners, imposition of selfmade code of conduct, apathy to active social dialogue made ordinary workers and trade unions more vulnerable. Closer cooperation between employers and employees are important to ensure the sustainability of an industry. However, it was evident that there is a lack of adequate communication between employees and employers and role of such social dialogue in building a healthy working relationship at factory level are always absent. It is absolutely difficult for workers to form legally registered in house union as a systematic tool to carry on social dialogue with employers at workplace.
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From an employers' perspective, they were an ideal workforce for an industry that sought to compete in the global economy on the basis of cheap labour. They could be paid much less than men with equivalent skills and be treated as a largely informal workforce to whom employers had no obligation aside from paying their wages. Today, things are beginning to change. Female education has gone up steadily; there has been widespread dissemination of ideas about women's rights through nongovernmental organizations (NGOs), state pronouncements and the media, while microfinance has increased and diversified employment opportunities in the countryside. Women enter the industry not just because of poverty, but also for the prospect of improving their family's standard of living, sending their children to school, saving for their dowries or supporting ageing parents. They have been able to leverage their earnings into increased decision-making power within their families and independent purchasing power in the market place. They have also become increasingly visible in collective actions in support of their rights, which have linked local and global movements. At the global level, campaigns have drawn attention to abuses of workers' rights in global supply chains and put pressure on international corporations to take greater responsibility for employees through corporate codes of conduct. Local employers in the Bangladesh garment industry must now demonstrate compliance with these codes
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to win orders from international buyers. The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) has formulated its own code of conduct for the industry, in collaboration with the major trade unions, and has set up a compliance unit that monitors labor conditions in members' factories. It has been known to freeze licenses of members whose factories have made headlines for violations. Legal success in winning favorable verdicts for workers in the labor courts also led BGMEA to set up its own conciliation and arbitration cell, with equal representation of employers and trade unions. This is intended to provide a less expensive and timeconsuming mechanism for settling disputes between employers and workers. In 2006, the Government passed a new labor code, after 12 years of deliberation and activism. It applies to all workers, and the new sections relevant to the garment industry include written contracts and identity cards, timely payment of wages, revised minimum wage, paid maternity leave and explicit laws against sexual harassment. Despite this progress, there is still much to be done to improve women worker's rights.
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The
spate
of
tragedies
began
on
Thursday, February 23, 2006 when a fire, possibly caused by an electrical short circuit, destroyed the four-story KTS Textile Industries in Bangladesh's port city of Chittagong. Initial reports stated that 54 were killed and at least 60 were injured, however other sources peg the death toll at several hundred in what local Feb 23 2006- Fire at KTS Textile Industries
garment workers rights' advocates are calling the worst tragedy in the history of the Bangladesh garment industry. Over 1,000 workers were reportedly in the factory at the time of the 7 p.m. fire. According to the workers, the exits were locked. In 2005 two electricians reportedly died at this same facility, located in the Kalurghat Industrial Area, when they were electrocuted. This facility reportedly produced for US companies Uni Hosiery, Mermaid International, ATT Enterprise, and VIDA Enterprise Corp. Meanwhile, authorities have apparently sealed off three other factories connected to this facility (Vintex Fashion, Cardinal Fashion and Arena Fashion) citing unplanned construction and inadequate safety measures as lifethreatening for their more than 6,000 workers.
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Just days after the KTS fire, 19 people were reported dead and 50 injured when a fivestory building collapsed in Bangladesh's capital city of Dhaka. The Phoenix Building in the Tejgaon industrial area collapsed following housed private unauthorized various hospital. offices One renovations and to convert the upper stories of the building that factories, fifty yet February 24 2006 - Collapse of the Phoenix building including a garment factory, into a 500-bed hundred an as construction workers and
unreported number of garment workers were reportedly in the building Saturday morning when it collapsed. Rescue operations,
hampered by lack of equipment, are still underway, as many are feared to be trapped under tons of concrete rubble. Hundreds of activists from workers' rights groups marched through Dhaka on Saturday demanding compensation for the victims families and punishment for the factory owners. Police have reportedly been searching for the building's owner Deen Mohammad, also chairman of the City Bank of Bangladesh, but have been unable to locate him. Phoenix Garments exports clothing mainly to Europe. That same day in Chittagong, 57 workers at the Imam Group of Industries (reportedly housing the Moon Fashion Limited, Imam Fashion, Moon Textile, Leading Fashion and Bimon Inda garment factories) were injured when a transformer explodes and fearing fire, they tried to exit through a narrow exit. Four are reportedly in critical condition following the stampede. There is a clear need for a long-term wide scale program to address health and safety in the garment/textile sectors. The failure to implement safety measures in these sectors in Bangladesh has resulted in a conditions where the death and injury of workers has become alarmingly routine: in 2000 53 workers died at Choudury
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Knitwear, 24 died in 2001 at Maico Sweater, nine died in 2004 at the Misco Supermarket building, and 23 died at Shan Knitting and 64 died at the SpectrumShahriyar factory in 2005.
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social responsibility. The multinational companies should be enforced to make regular visit to the subcontracting factories to ensure core labor standards. Employers associations may works as the watchdog of such initiative. The role of trade unions is to monitor the implementation of CSR at both large companies and subcontractors. The CCC believes that follow-up to these tragedies from local and international stakeholders must include 1. support for adequate rescue and relief efforts and financial compensation for the injured workers and the families of the dead; 2. full, independent and transparent investigation and follow-up for all these incidents; and 3. Immediate structural measures to prevent future, similar incidents. Industry, along with public authorities (at the local and international levels) must commit to launch an immediate initiative to take on the safety issues that plague the garment industry in Bangladesh, including a structural review of multi-story buildings and facilities inspection mechanisms, explained Zeldenrust. Introduction of Labor Standard Stickers on the exported goods, the monitoring and issuance of such stickers may be made under joint supervision of the government and the trade unions. The international buyers, government, trade unions may also encourage the employers to opt for Social Accountability. To protect the rights and interests of livelihood security of RMG workers, it is necessary to set up a Social Safety Net programs (contributory provident fund, gratuity, retrenchment fund) and compulsory Workers Insurance. Also an effective Special Fund (easily accessible for affected ordinary workers) can be made to deal with any adverse situation in the post-MFA environment. The workers at the garment sector lives under a terrible socio-economic condition with unstable and temporary employment, poor working conditions, long working hours, forced overtime & sexual harassment.
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The promotion o ILOs decent work program would be the most comprehensive effort to protect the workers of RMG sector in a quota-free world.
Possible way to Face the Coming Challenges for RMG sector in Bangladesh: To face the upcoming challenges in RMG sector, the country should take the following measures: Formulation of a national policy on RMB industry and workers for post MFA period. Unconditional and quick implementation of core labor standards and labor laws at workplace of all RMGs. Establishing a compulsory social safety net package for RMG workers. Exploration of new market for RMG to protect the industry and the workers and take maximum advantage of free excess to Canadian, Australian and other markers. Capacity building training and re-training activity for employers and workers in RMG sector to develop productivity and efficiency level. Develop backward linkage industries for RMG. Export and product diversification. Building alliances with likeminded neighbors and competitors within the LDCs. Continuous training program to sensitize the workers about their rights and interest should be undertaken in cooperation with and financial assistance from the fraternal organizational abroad.
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price competitiveness, enhanced GSP facility, market and product diversification, cheap labor, increased backward integration, high level of investment, and government support are among the key factors that helped the country to continue the momentum in export earnings in the apparel sector. Some of these elements are reviewed below. Market Diversification
Bangladeshi RMG products are mainly destined to the US and EU. Back in 1996-97, Bangladesh was the 7th and 5th largest apparel exporter to the USA and European Union respectively. The industry was successful in exploring the opportunities in markets away from EU and US. In FY06, a successful turnaround was observed in exports to third countries, which having a negative growth in FY05 rose three-fold in FY06, which helped to record 23.1 percent overall export growth in the RMG sector. It is anticipated that the trend of market diversification will continue and this will help to maintain the growth momentum of export earnings. At the same time a recent WTO review points out that Bangladesh has not been able to exploit fully the duty free access to EU that it enjoys. While this is pointed out to be due to stringent rules of origin (ROO) criteria, the relative stagnation in exports to EU requires further analysis. Table- 3: Region-wise Share of RMG Export Year Export Share to USA Export Share to European Countries 55.43 57.12 65.42 64.24 49.77 Combined Share of USA & EU (%) 98.10 95.14 94.06 94.88 83.43 Export Share of Other Countries (%) 1.90 4.86 5.94 5.12 16.57
2001-2002 42.67 2002-2003 38.02 2003-2004 28.64 2004-2005 30.64 2005-2006 33.67 Source: Export promotion Bureau
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Product Diversification
The growth pattern of RMG exports can be categorized into two distinct phases. During the initial phase it was the woven category, which contributed the most. Second phase is the emergence of knitwear products that powered the recent double digit (year-on-year) growth starting in FY04. Table-4: Growth Pattern of Woven and Knitwear Categories Year Woven Knitwear 2002-03 4.28 13.34 2003-04 8.59 29.88 2004-05 1.70 31.26 2005-06 13.50 35.38 Source: Bangladesh Bank In the globalize economy and ever-changing fashion world, product diversification is the key to continuous business success. Starting with a few items, the entrepreneurs of the RMG sector have also been able to diversify the product base ranging from ordinary shirts, T-shirts, trousers, shorts, pajamas, ladies and childrens wear to sophisticated high value items like quality suits, branded jeans, jackets, sweaters, embroidered wear etc. It is clear that value addition accrues mostly in the designer items, and the sooner local entrepreneurs can catch on to this trend the brighter be the RMG future. Table-5 : Export performance of different Apparel items Year Shirt 2001-02 871.22 2002-03 1019.88 2003-04 1116.57 2004-05 1053.34 2005-06 1056.87 Source : Bangladesh Bank Jackets 412.34 464.51 364.78 430.28 408.97 T-Shirt 546.28 642.62 1062.11 1349.71 1781.51 (in million USD) Trousers Sweater 636.61 517.83 643.66 578.38 1334.85 616.31 1667.72 893.12 2165.25 1042.61
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Backward Integration
RMG industry in Bangladesh has already proved itself to be a resilient industry and can be a catalyst for further industrialization in the country. However, this vital industry still depends heavily on imported fabrics. After the liberalization of the quota regime some of the major textile suppliers Thailand, India, China, Hong Kong, Indonesia and Taiwan increased their own RMG exports. If Bangladesh wants to enjoy increased market access created by the global open market economy it has no alternative but to produce textile items competitively at home through the establishment of backward linkage with the RMG industry. To some extent the industry has foreseen the need and has embarked on its own capacity building. The trend of back-to-back import has been declining over the years implying a rising contribution of domestic value addition (Figure 2). This is an optimistic indication that a well equipped and modern backward linkage industry may well prove cost effective and thus helping Bangladesh to meet the challenges in the postMFA era. Flow of Investment
It is plausible that domestic entrepreneurs alone may not be able to develop the textile industry by establishing modern mills with adequate capacity to meet the growing RMG demand. It is important to have significant flow of investment both in terms of finance and technology. The investment outlook in this sector is encouraging, although the uncertainties before the MFA phase-out period caused a sluggish investment scenario. In part the momentum in the post-MFA phase-out period is indicative of the efforts underway towards capacity building through backward integration. This is evident in the pace of lending to the RMG sector and in the rising import share of RMG related machinery. However further progress would be necessary to improve and sustain competitiveness on a global scale.
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Government of Bangladesh has played an active role in designing policy support to the RMG sector that includes back-to-back L/C, bonded warehouse, cash incentives, export credit guarantee scheme, tax holiday and related facilities. At present government operates a cash compensation scheme through which domestic suppliers to export-oriented RMG units receive a cash payment equivalent to 5 percent of the net FOB value of exported garments. The FY04 budget also lowered the corporate income tax rate for the RMG industry from 30 to 10 percent for the period up to June 30, 2006. From FY05 the tax regime has been further changed, and a 0.25 percent tax at source will be deducted from the value of the export proceeds of Woven and Knitwear category. At the same time, income tax rate for textile manufacturers were reduced to 15 percent from its earlier level for the period up to June 30, 2008. The reduced tax rates and other facilities are likely to have a positive impact on the RMG sector. Lead Time
Lead time is a crucial factor maintaining export competitiveness. Bangladesh happens to feature the longest lead time in the RMG world. The lead time for Bangladesh is 120 days on an average, while the corresponding period for Sri Lanka is about 19-45 days and for India it is only about 12 days. Various factors like the distance from major markets, importation of raw materials, port congestion, strikes, poor roads, etc. are some of the factors responsible for this. At present the fashion seasons are becoming short with a changing trend, it would not be possible to compete if the lead time extends beyond 30-40 days. Therefore, bringing down the lead time to about 30-40 days is a major challenge for the countrys RMG sector. Clearly more business can be captured only if the lead time could be improved.
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Infrastructural Impediments
The existence of sound infrastructural facilities is a prerequisite for economic development. In Bangladesh, continuing growth of the RMG sector is dependent on the development of a strong backward linkage in order to reduce the lead time. However, other factors constraining competitiveness of Bangladeshs RMG exports included the absence of adequate physical infrastructure and utilities (e.g., transportation, telecommunication, stable power supply, efficient seaport, political tolerance, quality control and a smoothly functioning bureaucracy). According to a recent World Bank-IFC publication (2006) records that a businessman in Bangladesh needs 35 days to export and incurs USD 902 per container, whereas his counterpart in India requires 27 days and spends USD 864 per container. The comparable figures for Pakistan, Sri Lanka and Vietnam are 24 days and USD 996, 25 days and USD 797, and 35 days and USD 701, respectively. Labor Productivity
The productive efficiency of labor is more important determinant for gaining comparative advantage than the physical abundance of labor. In Bangladesh, the garment workers are mostly women with little education and training. The employment of an uneven number of unskilled labors by the garment factories results in low productivity and comparatively more expensive apparels. Bangladesh labor productivity is known to be lower when compared with that of Sri Lanka, South Korea and Hong Kong SAR. Bangladesh must look for ways to improve the productivity of its labor force if it wants to compete regionally if not globally. Cheap Labor Force
The strength of a firm depends on its specific comparative advantages, which its competitors do not possess. To date the local industry has flourished in spite of the challenges cited above (e.g., lead time, infrastructure, and bureaucratic red tape) on the back of cheap female labor. The wages paid to RMG workers in Bangladesh are the lowest even by the South Asian regional standard. Figure 4 illustrates the
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comparative average hourly wages in apparel industry of selected developed and developing countries. Research and Training
The country has no dedicated research institute related to the apparel sector. RMG is highly fashion oriented and constant market research is necessary to become successful in the business. Here India has had a head start and Mumbai and Delhi are on line to become fashion centers on a global scale. At present whatever design work is done in the country, these are mostly carried out with foreign workers and experts. BGMEA has already established an institute which offers bachelors degree in fashion designing and BKMEA is planning on setting up a research and training institute. These and related initiatives need encouragement possibly intermediated by donorassisted technology and knowledge transfer. A facilitating public sector role can be very relevant here.
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Then several times the garments worker places their demand in different way. Their main demand was to increase their basic wage at Tk 3000. For achieving this demand, in 2005-2006 all hell broke loose as a riot broke out in and around the capital Dhaka city when a garments worker was shot in Savar, an industrial zone 30km away from Dhaka as police was trying to control the angry protesters. The death sparked more violence as thousands of garments workers took to the streets in Savar, creating chaos and huge traffic deadlocks around the capital. A section of 800-1000 violent protesters with sticks lead by motorcycle processions resorted to widespread damage of vehicles, attacked about 300 garments factories, and torched many of them. Widespread lootings were also reported and finally extra security forces were deployed to prevent this from going further. Then Government took some initiatives to sort out the problem and made some promise about the demand to the garments worker. As a result the garments sector became stable again. But the demand was not fulfilled. The workers demand for wage was not fulfilled. So the protest started again. On October 5th 2006, the Bangladesh Minimum Wage Board announced the first raise to the minimum wage for garment workers since 1994. The gross minimum monthly wage was announced as Tk 1,662.50 (20.12) including basic salary plus house rent and other allowances for entry-level workers. Previously this was Tk 930.The announcement means the basic wage without benefits is around Tk 1,100, far below the Tk 3,000 basic wage called for by Bangladeshi trade unions and supported by the Clean Clothes Campaign. Garment workers in different parts of Bangladesh have demonstrated against this new proposal and a series of strikes was occurred. As we previously stated, whilst garment workers and their supporters had been demanding wage increases for several years it
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wasn't until May 2006, following the outbreak of massive labor unrest by workers unable to tolerate the extreme exploitative conditions any longer, that any kind of action was taken by the Bangladesh government and the minimum wage board was formed. This riot came to an end under the state of emergency.
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Introduction: The performance of the readymade garment (RMG) sector has been
one of the most notable success stories of the Bangladesh economy over the last two decades. Nearly two million women workers were directly and more than ten million habitants were indirectly associated with this industry. Over the past twenty years, the number of manufacturing industries grew from 180 to over 3600. On the average this sector alone fetches over 75% of the total export earnings of the country (BGMEA, March 2007). Today, the RMG export sector consists of multibillion dollar manufacturing and export industries in the country. The overall impact of the readymade garment exports is certainly one of the most significant social and economic developments in contemporary Bangladesh. Because the economy of Bangladesh largely depends on the RMG sector, in short, this sector is still considered as the lifeline of the Bangladeshs economy and plays an indispensable role for the social stability of the country.
Backward linkage for Bangladesh RMG: Backward linkage means the use by
one firm or industry of produced inputs from another firm or industry (Alan V Deardorff, 2001). That means the finished garment relies on three steps; first level for converting fibers/cotton to yarns, second step for converting yarns to grey fabrics and the final step for converting gray fabrics to dyed, printed of other finished fabrics. These three steps are integrated into each other as shown in Table 1. It shows that these three steps are essential for backward linkage integration (BGMEA, January 2005). Out of three steps, Bangladesh is only capable of knitting, finishing in knitwear sectors but far behind in producing yarn, fabrics which is a major factor for woven section. Only success came to accessories where 80% demand of our country was fulfilled. The success of the garment industry very much depends on how effectively RMG sector linkages may operate backward and forward. If the manufacturer has effective control over the supply of raw materials, components and ancillary services needed to produce final product, then the production flow is likely to be interrupted. If the company develops an effective marketing service strategies that provide right signal, and if marketing and distributing systems as a whole are effective for having the products reach the target markets, then the sales revenue for the company is likely to be maximized. It means that to minimize cost of production and maximize sales revenues both backward and forward linkages need to be integrated. Here the issue of developing backward linkages is discussed with reference to the desirability of having control over the supply of inputs of RMG industry, mainly, fabric, yarn and processing status (Siddique, 2004).
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Table 1 Steps from fibers/cotton to finished fabrics Fibers/ yarns Grey fabrics Finished Fabrics Cotton Spinning Weaving or Knitting ,Printing, Finishing Out of three steps Bangladesh is only
Dyeing
Bangladesh RMG sector need for improved Backward linkages in post MFA: After abolition of quota in 2005, RMG sector in Bangladesh is facing stiff
competition in global apparel export market. Moreover, increased competitions have been felt from neighboring countries including India, Pakistan, China and Thailand from where Bangladesh import fabrics to meet the fabric demand of its RMG sector .These countries have stronger backward linkage support as they are able to utilize their locally produced yarns and fabric internally , resulting in higher price in the export market . putting pressure on the Bangladesh garments sectors . This observation is supported by the view of Ahmed khadker Habib cited by Hafiz G A siddiqui, (November 11, 1999) Bangladesh RMG sector , therefore. Needs to develop the backward linkage subsectors further in order to reduce dependency on imported raw materials and intermediate goods if she is to meet the export target in the global market . Again, competitive pricing is vital with this backward linkage support. Otherwise, it is not possible to survive in the world apparel market in the post MFA era. Faced with the quota-free global apparel trade. Bangladesh RMG sector must not only be competitive in products price but also in the lead time . Development and growth of backward linkage industries will reduce price range and lead time in the long run. As the backward integration is needed for composite, spinning, weaving, Finishing. Dyeing and processing, all steps beginning with raw material and ending with finished products must constitute backward linkages sub-sector .The RMG sector then will be faced with more challenges in meeting these goals . Moreover, Bangladesh RMG sector has great advantages in terms of the lower in producing the fabrics. The labor cost in Bangladesh, as shown in table 2, is one of the lowest. The table compares average hourly wages (including fringe benefits) in the RMG industry (sattar,2004) With cheap labor advantage, Bangladesh garment industry is still holding competitive position in the global apparel market. Overall percentage of RMG sector growth has been steady although the sector has been affected by the USA market. These industry contributed 78% share of total trade of goods in Bangladesh, compared to the other
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south Asian countries like India 14% Pakistan 23% Srilanka 50% and Nepal 40% (Garments association of Nepal 2001). In general, backward integration adds value and at the same time increases employment. Contribution of RMG sector in Bangladesh manufacturing can be measured by the increase in value-added (MVA) from 6.5 per cent in 1993-99 (CPD, October 2002) Another, researcher (Khadker, January 2002) claimed that of garment sector value added is only 25% and is much lower compare to other exported items which were contributed 60% to 70% in some cases. Two-third of garments export earning is for the labor fabrics purpose. To add more value it is imperative necessary to build and develop more backward linkages industries from yarn to finishing fabric process in Bangladesh .
the RMG industry in Bangladesh flourishes in the 80,s and 90,s there has been little development in the backward linkage sector (Habib, 2002). RMG manufacturers usually import fabric from different countries as locally produced raw-materials cannot compete with imported materials in term of price or in term of quality. At present, only 25%-30% value addition take place to the RMG products as manufacturer import bulk of the raw materials. On the country, almost 70% value addition takes places to the jute products exported to different countries. The garment industry should need to increases at least 50% value addition though enhancement of backward integration in the RMG market. Backward linkage subsector for RMG industry includes cotton production . Spinning (cotton and synthetic yarn), Weaving and Knitting, dyeing and painting, and accessories and all of the above sub-sector reflect the present condition of the backward integration in the RMg in Bangladesh.
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Cotton: Cotton is the main raw-material for yarn production while yarn production
of cottoning Bangladesh has very limited profit margin. Hence, Bangladeshi spinning mills depends on import cotton from international market .India. Pakistan. Turkey, China, Uzbekistan, USA are the main production sources where Bangladesh largely depend on. Bangladesh cotton development board (BCDB) undertakes cotton promotions activities but achievement is not satisfactory. BCDB is striving for higher production of cotton with a production range of 1, 03,620 bales in four cultivating zones in south-western part of the country. Cotton production requires vast land areas whereas in Bangladesh the land is in scarcity at only 144,000 square kilometer. Farmers prefer agriculture products that are more profitable than cotton. So in the context of cotton production. Bangladesh is in a dreadful situation. This implies that Bangladesh has to depend on imported cotton. Which involving large amount of foreign exchange. Bangladesh is not even in a position to move towards synthetic fiber production as it is capital intensive.
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The next stage is weaving and knitting where yearn are converted to fabrics . fabric is main raw-material for making garment and account for 75 of the garments cost. Both hands looms and power looms are suitable for the domestic market. But a large demand of quality fabrics cannot be met by hand looms production. But in case of power looms, they may increase the production capacity to satisfy part of the RMG sector demand with a large investment. In the long run, Bangladesh weaving mills need a high volume of yearn production to fulfill the demand for domestic and export market. In year 2000, fabric demand was 830 million meters, and soon after in year 2005 the demand almost doubled. In about 5 years of time, the demand would increase to 1600 million meters. To fill these huge demands and the fabric shortfall, the weaving industry needs to increase the production capacity by developing number of new weaving industries. Both new and reconditioned machines must be added in this sector. The associated large involvement required is almost $ 3.9 billon, $ 2.7 billion for new machines and $1.2 billion for reconditioned looms (CPD in the 12th EXPO).
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that for other backward integration sub-sector when compared with spinning and weaving sector. This statement is supported by Both Drs, martially and Gherzi who identified the finishing phase as area for improved competitiveness in Bangladesh and recommended investment (BGMEA 2004).
Policy implications and Conclusions: This study briefly discussed the present
condition of backward integration and its prospect as well as the negative impact on Bangladesh I garment industry in future. Canalizing the present condition, status and facts and finding of the above in the RMG sector, there are number of target actions in several areas can be considered along with their policy implications that directly influence the backward integration. From cotton to finished products, all steps involved such as spinning, weaving, dyeing, printing, finishing and accessories from an integral part of backward linkage procedure. The alternative support of central bonded warehouses is essential unless backward linkage satisfies itself in each sector by its components, especially in spinning and weaving sectors. The study tries to come up with possible suggestions for each sector, again using different researchers viewpoints.
Cotton: Cotton considered fist stage of backward linkage sub-sector which is the
main source for producing yearns. Bangladeshi garments industry is fully depended on imported cotton to fulfill the huge shortfall of yearn souring. Though Bangladesh needs to support cotton production but due to scarce land in Bangladesh, to build cotton industry in Bangladesh may not be recommended. This view is supported by Ahmed Khander habib, who does not recommended it due to shortage of land as well as the high cost involved. This situation is similar to Anatolia project of turkey. (Habib,20020. But in the another study in development in Democracy (DID, 1991) argues that not having cotton is actually not a disadvantage due to increased import of high quality cotton from neighboring countries (mainly India and Pakistan) where low quality of cotton are produced. But the question is raised that Bangladesh garments is not making high quality of garments nor it ranked as fashion/fancy garments market in the international apparel market. Bangladesh garments market is still categorized as a source of low to medium quality garments in the international market. So it may be necessary to sticks with low to medium range cottons. With the lower-price cotton markets, Bangladesh is disadvantageous compared to India textile mills who buy cotton from India growers 25% to 30% cheaper than Bangladesh import the same 47
cotton from India or international market. As a matter of policy , by allowing this policy , India government provides in effect a subsidy to the Indian mill owners (Siddique,2004). Similar subsidy in given in Pakistan and as a result their price is 20% lower than Bangladesh who buys the same cotton from Pakistan paying more. This creates a disadvantage for Bangladesh and it could possibly be overcome by reducing the conversation costs and by improving the management efficiency . The government needs to take some initiatives such as imposing no tariffs or quota on cotton import so that importers can get cotton cheaper and keep the cotton price down in the local market.
Spinning Sector: Hand loom is the larges support in yarn ion the Bangladesh
clothing industry. This sector contributes TK 10 million to national economy and is capable of fulfilling three-fourth of the local requirement in the apparel sector. Bangladesh is only 10-20% self-sufficient in spinning in input supply or degree of backward integration. In the knitting and woven sectors, there are huge shortfalls in the RMG sectors mainly in the exported oriented operations. To overcome the gap between supply and demand of yarn in RMG sector, it was necessary to establish 98 spinning mills to have their estimated cost to be about Taka 73.5 billion, or equivalent to USD $1.05billion (approx. US $1=Taka 70 in 2008). Before making a huge investment to develop backward linkage sub-sector in spinning mills, it is imperative to assess the level of competitiveness and viability for such project. The convention costs and the total manufacturing cost must be considered and must compare with that in China, India, and Pakistan as Bangladesh import cotton from these competing countries. It was also suggest by Bangladesh Ministry of Commerce (2004) that the handloom sector should be modernized. A comprehensive training designed for the RMG sector, Skilled and Quality Development Programme (SQDP) imported training at t5he dress root level to apply modern design, dyeing and weaving. The project tenure was five years at a cost of $4 million . Government should take some initiatives such as; to impose no barriers on import mechanism on back-to-back letter of credits (LCs); not to import yarns though ports; to ask recipients of cash subsidy to encourage the private and foreign investors to develop the backward integration.
Weaving: The analysis in the paper spells out number of points. It is noted that
weaving sector is the largest component of the backward integration, where the import accounts almost 75% of the total export garment value. Bangladesh is only 20% self-sufficient in weaving input supply. Bangladesh weaving mills constantly fall short of production owing to chain link shortage of yarn production in spinning subsector. As a result, the country has to import 3.15 billion meters of grey fabrics per year. Shortfall 200 weaving mills amounts to 10 million meters of fabric (Siddiqi, 2000) and it could attain the self sufficiency in yarn to fulfill the domestic and export needs in year 2005, which cost TK 50 each, amounting to TK 100 or equivalent to USD $1.43 billion (US $1 = Taka 70 approx. in 2008). The knitting segment of Bangladesh is better and the grey fabric demand is met by the domestic production. For the export market, around 85% the total woven fabric demand and about 35% of the total knit fabric demand are imported. Due to large demand-supply gap, the weaving and knitted sub-sectors require expansion at a rapid rate. Soon after the MFA
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phase-out, demand for fabric has risen making it imperative to increase the investment and modernized the machinery. It is necessary to have private sector take positive initiatives to support the waving sub-sector. It is considered that the weaving and spinning sub-sectors would be more attractive for large capital investment. If cost-effective investments in the spinning and weaving enhance the performance in the sub-sector, then Bangladesh has a possibility of building a competitive export-oriented sector in the post MFA era. In addition to making the large investments, the government has to waive import tax and VAT from spare parts, dyes and chemicals, and support 5% free on board value to deter the currency devaluation in of neighboring countries, provide loans with 7%, flat interest rate on all advances and loans, provide financial subsidy of at least 6-7%, waive the peak hour electricity charges, establish textile development fund of TK 50 billions, build a textile park, reschedule the container handling charge, and build a training centre for developing skilled labor Other issues may be to reduce the port charges for garments exports, to increase labor productivity and reduce the cost of doing business by Bangladesh Garment Manufacturers and Exporters Association and the government. Unless these bottlenecks are removed , a simplified backward linkage industry may not be realized.
.Dyeing, Printing and Finishing: The final linkage in the textile industry,
namely, dyeing, printing and finishing have improved dramatically over the last five years although only a few firms can match colors. The efficiency of the sub-sector however , depends m0ostly on the quality of the imported grey fabrics, which might be supplemented by domestically produced grey fabrics if their quality could be enhanced. In some cases, facilities for which still unable to meet the standard of quality demand by the export-oriented RMG industries. To get quality fabrics, some options can be considered. They include providing incentives for producing higher quality grey fabrics domestically and force the finishing industries to trim down the costs gradually to compete against the imported grey fabrics among others. Another strategy would be to provide bonded warehouse for fabrics until local grey production can meet the quality and quantity demands of the sub-sector. The government should also withdraw or reduce duty, advance income tax , infrastructure fees from dyeing, printing and finishing sub-sector in order set up new units with advance technology. This dyeing, printing and fabric processing sub-sectors are doing well in Bangladesh as these sectors are require only small-scale operations, small investments that are within reach of many entrepreneurs. All these mean that a stronger encouragement should provide for the development of these components of the backward integration. This view has also been supported by a IFC report which suggested development of dyeing, printing and fabric production facilities. Bangladesh would do better if it improves the infrastructural and the transport facility and its logistics, streamline the import policy by removing the cumbersome procedures. In addition, upgrading the facility at Chittagong port and substantial upgrading of the national electricity grid are needed for uninterrupted supply of power. In addition, improved
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telecommunication facilities and improved seaport management are needed along with enhanced law and order. Bangladesh garment industry face serious challenges if it wants to maintain and improve its competitiveness position in the post-MFA era. The challenges should serve as a wakeup cal for the garment industry for forming a new strategic position. With large labor resources, Bangladesh needs initiatives of private entrepreneurs along with a sustained government support. To maintain the high export position for the Bangladesh RMG sector, it should not be supported only by the cheap labor, but also by factor such as growth of backward integration. The paper finds that the success in the finishing, dyeing, printing, accessories sub-sector, rapid expansion in the knitting sector alone even under show development in the spinning and weaving sectors, the Bangladesh RMG sector is still in a viable position in the global appeal market. As it says`` where there is a will there is a way, the Bangladesh RMG sector will remain in the same good position by taking all the steps identified in this paper, and hopefully, it will enhance its export performance in the global market as a competitive nation. Finally , it can said that this study will be of significant value if the policy implications suggested in this research help develop plans for making Bangladesh RMG industry viable.
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Searching Buyers:
The first and for most important job of Buying House is to search for foreign buyers who want to import garment products for their own country.
1) The preliminary source of searching buyers once used to depend heavily on the record of Bangladesh Export Processing Bureau know as EPB or simply the list of Bangladesh Garments Manufacturing and Export Association known as BGMEA. But theses records or lists of importers delivered by EPB or BGMEA are sometimes backdated meaning some of the listed importers may The medium of the questionnaire was in English. The questionnaire was administered face to face, with the respondent either' -by. ticking the answer by the respondent himself or by answering the questions of the researcher. Some of these were filled up after a small conversation relevant to the subject of the study. As Philip Kotler has defined marketing as the social and managerial process by which people and organization gets whatever they want by creating, offering and exchanging the goods of value with each other.
In our country the marketing process of buying house can be seen as below:
Not are currently importing or new importers names are not mentioned in the list as the lists or records are quite old. For these reasons nowadays buying houses are very much encouraged to search buyers through method.
2)
The second source of searching buyers is to contact with the respective foreign country embassies of our country and to ask them to provide the list of garment importers of their country who import garment products from our country.
The Buying House can also send its representatives to foreign countries and
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over there they can contact our local high commission who has also the records of importers. They can help the Buying House representatives in this respect; So, either of the ways Buying House tan get information of importers.
3)
international buyers from the web sites and then contact with them through email, fax or telephone. This way of searching buyer is very new and helpful in this technological age. With almost no money they can contact with foreign buyers and make the dealings. However, since our country has yet not been so technologically updated, this method of communicating buyers is not yet been very popular.
4)
foreign country and by participating those places Buying House can present themselves in front of foreign buyers of different countries. This method of searching is very useful. These kind of exhibitions are often held our country where both buying houses and foreign buyers participate and gets to see each other, know each other and are able make deals.
5)
The fifth and most commonly way of searching buyers is getting new buyer by
the exiting buyers. Sometimes Buying House. request its existing buyers, to give them some new buyers. Their existing Buyers who are satisfied by doing business then give them new buyers. This method is very trust worthy because, in one hand Buying Houses get the. Information of that buyers with the reference of its existing buyers, on the other hand a new buyer can also feel safe as he gets the reference of the buying houses form his known person who is already involved in business with them.
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Introduction Letter:
Buying House issues an introducing letter to the respective foreign buyers. This is a letter which states the total experience year of the Buying house, its parameter of top. l activity, its total age, their previous relationship with suppliers and at present with how many buyers and suppliers, they are doing business. The introducing letter also states what kind of orders they usually take form buyers and their efficiency and effectiveness of handling an order as well as an approximate time and procedure of a typical order process.
Once the buyer received the introducing letter from the buying it is his time to introduce himself to the buying house. Actually in this letter buyer informs the Buying house about his demand of the product. A typical inquiry sheet includes the requirements of the products in quantity, item description, order detail and order specification etc. This inquiry sheet is very important to buying house because with the help of this inquiry sheet they set price and cost. In the inquiry sheet buyer also want ask the buying house to inform him the total price that the buyer have to give for his order.
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Merchandising:
Then the job of merchandising starts. The merchandiser first determines what are the things required to make an unit or a dozen of an order. Then he estimates the per unit fabric consumption, accessory consumption, cost of making (CM) and other costs such as freight cost. Price is usually set per dozen.
Up to this stage all the information is transferred between both party is usual1y done by email fax, or phone.
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Export processing
The term "export" is derived from the conceptual meaning as to ship the goods and services out of the port of a country. The seller of such goods and services is referred to an "exporter" who is based in the country of export whereas the overseas based buyer is referred to as an "importer". In International Trade, "exports" refers to selling goods and services produced in home country to other markets. In economics, an export is any good or commodity, transported from one country to another country in a legitimate fashion, typically for use in trade. Export goods or services are provided to foreign consumers by domestic producers. Export of commercial quantities of goods normally requires involvement of the customs authorities in both the country of export and the country of import. The advent of small trades over the internet such as through Amazon and e-Bay have largely bypassed the involvement of Customs in many countries because of the low individual values of these trades. Nonetheless, these small exports are still subject to legal restrictions applied by the country of export. An export's counterpart is an import. Barriers Strategic Tariffs Subsidies Exports and free trade Export strategy Export strategy is to ship commodities to other places or countries for sale or exchange. In economics, an export is any good or commodity, transported from one country to another country in a legitimate fashion, typically for use in trade.
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Advantages of exporting
Ownership advantages are the firm's specific assets, international experience, and the ability to develop either low-cost or differentiated products within the contacts of its value chain. The locational advantages of a particular market are a combination of market potential and investment risk. Internationalization advantages are the benefits of retaining a core competence within the company and threading it though the value chain rather than obtain to license, outsource, or sell it. In relation to the Eclectic paradigm, companies that have low levels of ownership advantages either do not enter foreign markets. If the company and its products are equipped with ownership advantage and internalization advantage, they enter through low-risk modes such as exporting. Exporting requires significantly lower level of investment than other modes of international expansion, such as FDI. As you might expect, the lower risk of export typically results in a lower rate of return on sales than possible though other modes of international business. In other words, the usual return on export sales may not be tremendous, but neither is the risk. Exporting allows managers to exercise operation control but does not provide them the option to exercise as much marketing control. An exporter usually resides far from the end consumer and often enlists various intermediaries to manage marketing activities.
Disadvantages of exporting
For Small-and-Medium Enterprises (SME) with less than 250 employees, selling goods and services to foreign markets seems to be more difficult than serving the domestic market. The lack of knowledge for trade regulations, cultural differences, different languages and foreign-exchange situations as well as the strain of resources and staff interact like a block for exporting. Indeed there are some SME's which are exporting, but nearly two-third of them sells in only to one foreign market. The following assumption shows the main disadvantages:
Financial management effort: To minimize the risk of exchange-rate fluctuation and transactions processes of export activity the financial management needs more capacity to cope the major effort Customer demand: International customers demand more services from their vendor like installation and startup of equipment, maintenance or more delivery services. Communication technologies improvement: The improvement of communication technologies in recent years enable the customer to interact with more suppliers while receiving more information and cheaper communications cost at the same time like 20 years ago. This leads to more transparency. The vendor is in duty to follow the real-time demand and to submit all transaction details. Management mistakes: The management might tap in some of the organizational pitfalls, like poor selection of oversea agents or distributors or chaotic global organization.
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Air freight shipments require Airway bills, which can never be made in negotiable form Airway bills are shipper-specific (i.e. USPS, Fed-Ex, UPS, DHL, etc). Bill of Lading
A contract between the owner of the goods and the carrier (as with domestic shipments). For vessels, there are two types: a straight bill of lading, which is nonnegotiable, and a negotiable or shipper's order bill of lading. The latter can be bought, sold, or traded while the goods are in transit. The customer usually needs an original as proof of ownership to take possession of the goods. Commercial Invoice
A bill for the goods from the seller to the buyer. These invoices are often used by governments to determine the true value of goods when assessing customs duties. Governments that use the commercial invoice to control imports will often specify its form, content, number of copies, language to be used, and other characteristics.
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Considerably more detailed and informative than a standard domestic packing list, it lists seller, buyer, shipper, invoice number, date of shipment, mode of transport, carrier, and itemizes quantity, description, the type of package, such as a box, crate, drum, or carton, the quantity of packages, total net and gross weight (in kilograms), package marks, and dimensions, if appropriate. Both commercial stationers and freight forwarders carry packing list forms. A packing list may serve as conforming document. It is not a substitute for a commercial invoice. Electronic Export Information Form (Shippers Export Declaration)
The EEI is the most common of all export documents. Required for shipments above $2,500* and for shipments of any value requiring an export license. SED has to be electronically filed via AES Direct (free service from Census and Customs) online system. 02. CERTIFICATES OF ORGIN Generic Certificate of Origin
The Certificate of Origin (CO) is required by some countries for all or only certain products. In many cases, a statement of origin printed on company letterhead will suffice.The exporter should verify whether a CO is required with the buyer and/or an experienced shipper/freight forwarder or the Trade Information center. For textile products, an importing country may require a certificate of origin issued by the manufacturer. The number of required copies and language may vary from country to country. Certificate of Origin for claiming benefits under Free Trade Agreements
Special certificates may be required for countries with which the United States has free trade agreements (FTAs). Some certificate of origin including those required by the North American Free Trade Agreement (NAFTA), and the FTAs with Israel and Jordan, are prepared by the exporter. Others including those required by the FTAs with Australia, CAFTA countries, Chile and Morocco, are importers responsibility). Click on a specific country below to learn details on how to document origin. Australia (CO samples) Bahrain (importer to check with Govt. of Bahrain on format/information) CAFTA (Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras CO sample) Chile (CO sample) Israel (sample Note: Green form needs to be purchased from Vendor or US-Israel Chamber of Commerce or a publishing house )
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Jordan (notarized generic certificate of origin required) Morocco (importer makes a claim on the basis of supporting evidence) NAFTA (Mexican, Canada, sample) Singapore (no certificate of origin is required. However, the importer is required to produce the necessary permits together with an invoice, at the time of cargo clearance.)
03. OTHER CERTIFICATES FOR SHIPMENTS OF SPECIFIC GOODS ATA CARNET/Temporary shipment certificate
An ATA Carnet a. k. a. "Merchandise Passport" is a document that facilitates the temporary importation of products into foreign countries by eliminating tariffs and value-added taxes (VAT) or the posting of a security deposit normally required at the time of importation. Certificate of Analysis
A certificate of analysis is required for seeds, grain, health foods, dietary supplements, fruits and vegetables, and pharmaceutical products. Fumigation Certificate
The Fumigation Certificate provides evidence of the fumigation of exported goods (esp. agricultural products, used clothing, etc). This form assists in quarantine clearance of any goods of plant or animal origin. The seller to fumigate commodity at their expense a maximum of fifteen (15) days prior to loading. Ingredients Certificate
A certificate of ingredients may be requested for food products with labels that are inadequate or incomplete. The certificate may be issued by the manufacturer and must give a description of the product, contents and percentage of each ingredient, chemical data, microbiological standards, storage instructions, shelf life, and date of manufacture. If animal fats are used, the certificate must state the type of fat used and that the product contains no pork, artificial pork flavor, or pork fat. All foodstuffs are subject to analysis by Ministry of Health laboratories to establish their fitness for use. Inspection Certificate
Weight and Quality certificates should be provided in accordance with governing USDA/GIPSA regulations for loading at port and loading at source/mill site as appropriate. A certificate of origin certified by local chamber of commerce at load port and a Phytosanitary certificate issued by APHIS/USDA and Fumigation certificate are to be provided to buyer. Costs of all inspection, certificates/ documents at the load port are usually the responsibility of the seller.
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Insurance Certificate
Used to assure the consignee that insurance will cover the loss of or damage to the cargo during transit (Sample). These can be obtained from your freight forwarder or publishing house. Note: an airway bill can serve as an insurance certificate for a shipment by air. Some countries may require certification or notification. Steamship or Airline Company Certificate
A declaration attached to a bill of lading or airway bill stating that the shipper will not stop at an unscheduled port, attesting to the accuracy of the shipping route and providing other shipping information such as name of vessel/plane, nationality of vessel/plane, owner of vessel/plane, names of ports of call including port of leading and discharge. Other (product-specific) certificates
Shaving brushes and articles made of raw hair must be accompanied by a recognized official certificate showing the consignment to be free from anthrax germs. Used clothing requires a disinfection certificate. Grain requires a fumigation certificate, and grain and seeds require a certificate of weight. Many countries in the Middle East require special certificates for imports of animal fodder additives, livestock, pets, and horses. Weight certificate
Certificate of weight is a document issued by customs, certifying gross weight of the exported goods. 04. EXPORT LICENSES Export license is a government document that authorizes the export of specific goods in specific quantities to a particular destination. This document may be required for most or all exports to some countries or for other countries only under special circumstances. Destination Control Statement
Destination Control Statement (DCS) is required for exports from United States for items on the Commerce Control List that are outside of EAR99 (products for which no license is required). A DCS appears on the commercial invoice, ocean bill of lading or Airway bill to notify the carrier and all foreign parties that the item can be exported only to certain destinations.
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The International Standards for Phytosanitary Measures Guidelines for Regulating Wood Packaging Material in International Trade (ISPM15) is one of several International Standards for Phytosanitary Measures adopted by the International Plant Protection Convention (IPPC).
05. OTHER EXPORT RELATED DOCUMENTS Consular Invoice Canadian Customs Invoice Dock Receipt and Warehouse Receipt Import License Pre-shipment Inspections Shippers Letter of Instruction
06. TEMPORARY SHIPMENTS ATA CARNET/Temporary shipment certificate Customs Certificate of Registration
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Only WRAP and SAI have certification for factories ,whereas FLA certifies brands, not factories. The other above-mentioned codes of conduct do not have any certification Description of this voluentary code of conduct are given bellow
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monitor the process. The audit results are not public. The ETI publishes annual reports that summarize the progress of code implementation. The costs of conducting an ETI audit is less that 1000. The FLA developed from the Apparel Industry Partnership (AIP), an initiative established by
The code applies to direct suppliers as well as subcontractors. The BSCI code does not offer a certificate but suppliers who are compliant with the BSCI requirements can apply for a SA8000 certification. A factory is qualified for a period of 3years but there are periodic audits in between at random intervals. The audit results are placed in the BSCI databank which can only be accessed by BSCI member companies. The audit results are also provided to respective retailers/brands and factories undergoing the audit. The BSCI refers to the ILO conventions other relevant international regulations as well as to national and local regulations. The producers are responsible for the implementation of the code in their supplying factories. Similar to SA8000, the BSCI standard requires the implementation of a management system and the setting up of systems to detect avoid or respond to potential threats to the health and safety of all personnel In addition to that, the BSCI code requests to establish and follow an anti-bribery/anti-corruption policy in all of their business activities. Some particular elements of the BSCI code are environmental and safety issues. The BSCI code requires the implementation of procedures and standards for handling and disposure of chemicals and other dangerous materials. Moreover, the treatment of emissions and effluent must meet or exceed minimum legal requirements.
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manufacturers must equip themselves with these tools in order to maintain the dynamism of their industry.
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In accordance with the ILO Conventions , the United Nations Universal Declaration of Human Rights, the UNs Conventions on childrens rights and elimination of all forms of discrimination against women , the UN Global Compact and the OECD Guidelines for Multinational Enterprise and other relevant internationally recognized agreements, the BSCI code of conduct aims to attain compliance with certain social and environmental standards. By signing the BSCI code of conduct companies are , within their scope of influence, committed to acknowledge the social and environmental standards laid down in this code and to take appropriate measures within their company policy for their implementation and compliance. Supplier companies , in addition, must ensure that the code of conduct is also observed by subcontractors involved in production processes of final manufacturing stages carried out on behalf of BSCI members. Within the scope of options for action and appropriate measures , these supplier companies have to aim at the implementation of the following criteria in a development approach:
5.8.1-Legal Compliance:
Compliance with all applicable laws and regulations , industry minimum standards , ILO and UN Conventions, and any other relevant statutory requirements whichever requirements are more stringent . In the agriculture context , ILO Convention 110 shall be respected.
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5.8.3-Prohibition of Discrimination:
No discrimination shall be tolerated in hiring, remuneration, access to training, promotion, termination or retirement based on gender, age ,religion, race, caste, birth, social background, disability, ethnic and national origin, nationality, membership in workers organizations including unions , political affiliation or opinions, sexual orientation, family responsibilities , marital status , or any other condition that could give rise to discrimination. -In accordance with ILO Conventions 100, 111, 143, 158, 159, 169 and 183
5.8.4-Compensation:
Wages paid for regular working hours, overtime hours and overtime differentials shall meet or exceed legal minimums and/or industry standards. Illegal, unauthorized or disciplinary deductions from wages shall not be made. In situations in which the legal minimum wage and/or industry standards do not cover living expenses and provide some additional disposable income, supplier companies are further encouraged to provide their employees with adequate compensation to meet these needs. Deductions from wages as a disciplinary measures are forbidden , unless this is permitted by national law and a freely negotiated collective bargaining agreement is in force. Supplier companies shall ensure that wage and benefits composition are detailed clearly and regularly for workers; the supplier company shall also ensure that wages and benefits are rendered in full compliance with all applicable laws and that remuneration is rendered in a manner convenient to workers. All overtime shall be reimbursed at a premium rate as defined by national law. In countries where a premium rate for overtime is not regulated by law or a collective bargaining agreement, personnel shall be compensated for overtime at a premium rate or equal to prevailing industry standards, whichever is more favorable to workers interests. -In accordance with ILO Conventions 12, 26, 101, 102 and 131.
5.8.5-Working Hours:
The supplier company shall comply with applicable national laws and industry standards on working hours and public holidays. The maximum allowable working hours in a week are as defined by national law but shall not on a regular basis exceed 48 hours and the maximum allowable overtime hours in a week shall not exceed 12 hours. Overtime hours are to be worked solely on a voluntary basis and to be paid at a premium rate. In case where overtime work is needed in order to meet short-term business demand and the company is party to a collective bargaining agreement freely negotiated with worker organizations (as defined above) representing a significant
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portion of its workforce, the company may require such overtime work in accordance with such agreements. Any such agreement must comply with the requirements above. An employee is entitled to at least one free day following six consecutive days worked. Exceptions to this rule apply only where both of the following conditions exist : a) National law allows work time exceeding this limit b) A freely negotiated collective bargaining agreement is in force that allows work time averaging, including adequate rest periods. -In accordance with ILO Conventions 1 and 4 and ILO Recommendation 116.
provide adequate financial and other support to enable such children to attend and remain in school unit no longer a child. The company may employ young workers, but where such young workers are subject to compulsory education laws, they may work only outside of school hours. Under no circumstances shall any young workers school , work. And transportation time exceed a combined total of 10 hours per day, and in no case shall young workers work more than 8 hours a day. Young workers may not work during night hours. -In accordance with ILO Conventions 10, 79, 138, 142 and 182 and recommendations 146.
5.8.10-Management Systems:
The supplier company shall define and implement a policy for social accountability, a management system to ensure that the requirements of the BSCI code of conduct can be met as well as establish and follow an anti-corruption policy in all of their business activities. Management is reasonable for the correct implementation and continuous 75
improvement by taking corrective measures and periodical review of the code of conduct, as well as the communication of the requirements of the code of conduct to all employees. It shall also address employees concerns of non compliance with this code of conduct.
Good
Fulfillment of at least half of the audit points. There are no deviations in crucial points Deviations in the major of requirements and/or in crucial points. The requirements are not fulfilled in more than half of the points, and/or not fulfilled in crucial points Requirements do not match to the company structure: The requirements are not relevant with respect to the structure of the company.
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that in every country, the law of the land prevails. But at times, the requirements of the codes are higher than the national labor laws and then, whatever standard is highly prevails. These issues are clearly stated in all codes of conduct. The buyers preferences to their own codes of conduct becomes challenging for the suppliers. One supplier usually has more than one buyer. If each buyer has a different set of requirements, it becomes difficult for the suppliers to implement all the requirements simultaneously. Also, as a monitoring measure, the supplier has to undergo several audit spar year for each buyer. The small and medium size factories which usually include the subcontractors specially need support regarding compliance to codes. The direct suppliers are better equipped to comply with codes whereas subcontractors find it more challenging from both a financial perspective as well as lack of knowledge regarding implementation. The costs associated with implementation and maintenance of compliance standards is pretty high and at times, factories find it difficult to sustain themselves in such environments. The trend shows that in the last few years the CM prices have a downward trend hence buyers should consider the aspects of sustainable pricing so that their suppliers can comply with their requirements. Also, suppliers should be aware that compliance to the national labor law is mandatory. Hence to stay in business legally, they must abide by the law. Full compliance to the labor law helps the suppliers to become compliant to general and specific buyers codes of conduct. The comparison matrix clearly shows that if the suppliers comply 100% with the national labor law, then they tentatively cover 85% to 90% of the leading general codes of conduct. The buyers codes of conduct are not that different from the general codes of15conduct. Hence suppliers should aim to comply by the national labor law and then maybe by just adding a few more aspects, they can also fully comply with their specific buyers codes or the general codes of conduct. The government encounters several hurdles when monitoring the implementation of the national labor law mainly due to resource constraints. Currently, the government only has 53factory inspectors who are responsible for all sectors. There are no specific inspectors assigned for the RMG sector. Fortunately, both the business associations have strong, in house social compliance monitoring teams who compliment the work of the government factory inspectors and carry out inspections at the member factories of the respective associations. However, social compliance monitoring data from the associations is often criticized regarding its authenticity. Hence, nowadays, especially in monitoring the implementation of the points in the tripartite the government and associations have teamed up to do joint inspections. This results in optimal use of resources and also provides neutral data. Compliance to the national law and codes of conduct is a tedious and long term process. However, there are a lot of tools and expertise available through business associations another service provider which facilitate the suppliers to become compliant. Suppliers should take advantage of the available resources and start the process so that they can continue business in a competitive environment.
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5.11- Conclusion
Our aim through piece of research was to highlight the importance of the revised national labor law in Bangladesh and how it meets majority of the requirements of the leading general codes of conduct. The comparison study provides a succinct matrix which illustrates the commonalities as well as the difference between the revised Bangladesh Labor Law 2006and the seven leading general codes of conduct. Suppliers must comply with the national labor law to do business in Bangladesh. Simultaneously, they must comply with their buyers codes of conduct to supply to their customers. The endless compliance requirements become extremely challenging for the suppliers, both in terms of costs as well as implementation. Numerous audits are also a challenge which suppliers are encountering. It isextremely difficult to have different setups on the same factory floor because of the minor differences in the national labor law as well as among the different buyers codes of conducts. In order to avoid numerous audits, many buyers are now accepting the audits done by the general codes of conduct. For example, if a factory is SA8000 certified or passes a BSCI audit the some buyers may forego their own audits. This does simply the process of numerous audits. Out of the seven leading general codes of conduct covered in this research, only two have a formal certification procedure, SAI and WRAP. Certifications to the leading codes of conduct may act as a competitive advantage for suppliers. However, here are significant amount of costs associated with obtaining and maintaining these certifications. So, not all factories can sustain these costs. The FLA does not certify individual factories but they certify brands and retailers. Compliance to international codes and standards is an extremely vital tool to build on the mage of the Bangladeshi RMG sector. Since the 1970s, Bangladesh has been one of the main sourcing destinations for the major international brands, retailers and buyers. The industry thrived in the last three decades primarily by taking advantage of the trade quota were in place in the global textile and apparel industry. Also, low labor costs have always been one of the competitive advantages for Bangladesh garments in the global sourcing market. The Bangladesh RMG sector has always had a sweatshop image which still prevails although there have been drastic improvements in working conditions at the factories. Currently, Bangladesh has many world class factories which are 100% compliant and which compete with any leading factory across the globe.
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Slitting Slenter
Inspection Delivery
Chart
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Marketing is one of the major sectors for an organization which help the organization to reach to the goal effectively and efficiently. It is the process by companies creates value for customers and builds strong customer relationships in order to capture value from customers in return. In achieving the business goal organization have to identify their target customers groups to which they provide the products. For this, organization screen out their potential customers group through
Market Segmentation The process of dividing a market into distinct groups of buyers with different needs, characteristics or behavior. Target Marketing The process of evaluating each market segments attractiveness and selecting one or more segments to enter. Market Positioning - Occupying a clear, distinctive and desirable place relative to competing products in the minds of target customers.
In achieving the target effectively marketing tools are used to provide the products to the customers. Marketing tools is known as marketing mix or 4ps. The marketing mix is probably the most famous phrase in marketing. Marketing decisions generally fall into the following four controllable categories:
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"Marketing mix" is a framework which acts as a guideline for marketers to implement a marketing concept. It consists of a set of major decision areas that a company needs to manage in order to at least satisfy consumer needs. According to Kotler Armstrong, the marketing mix is a set of "controllable tactical marketing tools [product, price, place, promotion] that the firm blends to produce the response it wants in the target market". The marketing mix consists of everything the firm can do to influence the demand for its product.
4ps in Details:
Product
Variety Quality Design Features Brand Name Packaging Services
Place
Channels Coverage Assortments Location Inventory Transportation Logistics
Figure -3 4Ps analysis 1. Product: "Anything that can be offered to a market for attention, acquisition, use or
consumption that might satisfy a want or need. In includes physical ob-jects, services, persons, places, organizations and ideas."
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2. Price: "The amount of money charged for a product or service, or the sum of the
values that consumers exchange for the benefits of having or using the product or service."
3. Promotion: "Activities that communicate the product or service and its merits to
target customers and persuade them to buy."
4. Place: "All the company activities that make the product or service available to target
customers."
Product:
The product is the most important aspect of the marketing mix. Products have both tangible and intangible benefits. Tangible benefits include benefits which can be measured such as the top speed of a car. Intangible benefits are benefits that cannot be measured such as the enjoyment of the customer will get from the product. Exactly what product or service are you going to sell to this market? Define it in terms of what it does for your customer. How does it help your customer to achieve, avoid or preserve something? You must be clear about the benefit you offer and how the customer's life or work will be improved if he or she buys what you sell. Here are some examples of the product decisions to be made:
Brand name Functionality Styling Quality Safety Packaging Repairs and Support Warranty Accessories and services
Price:
The amount of money customers have to pay to obtain the product. Many things influence prices, including the number of suppliers, the number of customers, and the availability of the product.
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Effective pricing for a product is very much important to keep current customers and potential customers. If the price is too high consumers will avoid the product as they will believe it to be too expensive yet if the product is priced too low they may believe that there is something wrong with the product for it to be so cheap. But in luxuries or fashionable products or in case of reputed brand product value pricing is important. So in here extra price should be charged for their values which differentiate it from others related products. In this case this statement the higher the price, the more you sell will be effective. So pricing of products should be taken very carefully so that customers can measure price with their expected quality. Exactly how much are you going to charge for your product or service, and on what basis? How are you going to price it to sell at retail? How are you going to sell it at wholesale? How are you going to charge for volume discounts? Is your price correct based on your costs and the prices of your competitors? Some examples of pricing decisions to be made include:
Pricing strategy (skim, penetration, etc.) Suggested retail price Volume discounts and wholesale pricing Cash and early payment discounts Seasonal pricing Bundling Price flexibility Price discrimination
Place:
Company activities that make the product available to target consumers. Getting the product to the customer as quickly and conveniently as possible is an essential aspect of marketing mix. The place is not where is located your business but where our customers are. Distribution is about getting the products to the customer. Some examples of distribution decisions include:
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Specific channel members Inventory management Warehousing Distribution centers Order processing Transportation Reverse logistics
Promotion:
Promotion includes all the activities designed to bring a companys goods or services to the favorable attention of customers. That means the steps or activities that communicate the merits of the products and persuade target customers to buy it. It represents the various aspects of marketing communication, that is, the communication of information about the product with the goal of generating a positive customer response. Marketing communication decisions include:
Promotional strategy (push, pull, etc.) Advertising Personal selling & sales force Sales promotions Public relations & publicity Marketing communications budget
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Titanic is a leading RMG in Bangladesh which is running their business with well reputation in world wide. They believe in quality product which can only be the factor to be competitive in global market and can bring the competitive success in RMG market in this globalization world.
Titanic is committed to meet and exceed customer requirements in making garments and obviously meet its own employee satisfaction. They are gradually reducing rejection and re work rate in in-process and final garments in order to ensure product quality and delivery time as per buyers requirements and increase profitability. They are ensuring adequate training and suitable work environment to enhance productivity and skills of the employee.
Customer Satisfaction is quality is their main strategy. Titanic mean it. They
have several quality circles to maintain quality. They work based on statistical quality control. Their production process is based on AQL 2.5 and whole production maintains it. They are going through Total Quality Management (TQM). We inspect their fabric in 4 point system. We are running a bundle system to maintain quality and smooth production. Titanic has a very promising strategy about workers welfare and lifestyle development. They are running their company under SA8000 compliance criteria. Most of their buyers have Okotex certification.
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Good planning can bring success whatever the tough issue in business world. Effective marketing planning or strategy is now a crucial issue for achieving business goal efficiently. The Consumer Electronics department looks after the marketing aspect of the C.E. products, assembled and imported by the Transcom Electronics Limited. Transcom Electronics Limited is a strong challenger in the consumer electronics market only because of its strong marketing strategies and implementation. They have different promotional activities as well as strong distribution network through out the country.
4ps Analysis:
Product
Variety Quality Design Features Brand Name Packaging Services
Place
Channels Coverage Assortments Location Inventory Transportation Logistics
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Product:
Product: Readymade Garments. [see in annexure] Brand name: Titanic (Textown) Size: All size & shapes of garments. Product type: Shopping Product Product feature: Fashionable and lucrative. Product Quality: High quality garments products which materials are imported from abroad. Product style and design: Attractive design with different model helps the product to be effective at its best. Packaging: Simple but attractive packaging are used in this product.
PRICE:
As Titanic is an export oriented garments so its pricing strategy has to be more competitive and market situation oriented. It has to fight with the international market. So it has to be aware about the international market environment to achieve their goal.
Place:
The Textown group exports their product with good reputation to abroad. They currently export their product to Benetton (Italy), Kappahl (Sweden), PF Concept (Holland), Next Lime (UK), Derotennies (France), Matalan (UK), Tako (Germany), Spectra SN Tex (France). They are very much reputed for their timely shipment of their products.
Promotion
Titanic promotes their product through their strong network communication world wide. It is the best media for RMG to provide the best quality product with cheapest cost. So they dont believe in mass advertisements, They believe in only personal communication and product quality and their in time policy which works for their brand promotion also.
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1 Spinning
2 Knitting
3 Dyeing
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4 Cutting
4 Sewing
6 Washing
7 Quality Checking
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8 Ironing
9 Folding
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10 Labeling
11 Finishing
12 Packing
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Problems
The problems and barriers that are hindering the growth of export oriented Buying House industry are classified under the following major functional areas:
Most of the employees of Buying Houses are not enough skilled to perform their job. In the Buying House there are some post such as quality controller, design maker, merchandiser that require technical skill to be performed but as the employees do not have any institutional training they lack such technical skill. On1y way they can learn is through on the job training. Convincing foreign buyers and establishing long term relationship with them is one of the most important task of Buying Houses. To perform this job employees of Buying Houses need proper language and communication skill. 13ut in our country as the education medium is Bengali and there are less opportunity to learn other foreign languages therefore employees lack communication skill to convince and establish long term relationship with foreign Buyer.
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No training Institution:
There are no such courses designed in any of the public or private educational institutions of our country which can give employees of buying houses training specifically to perform t);1eir job. As a result people usually coming to this field are from different background. They are usually unskilled and inexperienced. Fleeting tendency of Employees of buying houses have a very high tendency to switch their jobs. This may be because of their poor salary structure and no service benefit. As a result whenever they find any better offer they try to switch they're existing one.
Employees involved with this industry have fewer chances for career development because of small structure of the industry. As a result less people are interested to come to this field.
Dictatorship of employer:
Employers of buying houses are usually autocratic with their subordinate employees as a result of which employees are often de-motivated to work. They feline they are always under pressure.
No Trade Union: As the employees of this industry do not have any union to support their claims, the employers always neglect their demands.
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No vision:
Buying house industry is in its growth industry but this growth is a result of so caned blessing of quota system but not the achievement of their efficiency. Even the constituents of this industry buying houses have never been shown any vision of prospect, both in their attitude and actions. This is the warming of undesired maturity for this industry. Even though they are aware about the guillotine of year 2005, but it seems that they are ready to dye out.
Threat, button, cartoon, backboard these are treated as accessory of garments product. Industries of these products are treated as backward linkage industry of garment exports. Most of the times Buying House supply these accessories to garment manufacturers. But due to insufficient number of factories, Buying House faces diff1culties to supply these accessories on time. The quality of these accessory most of the time do not matches, as it demanded due to their inefficiency and ineffectiveness in production. Majority people involved in this sector are illiterate. As a result of which they are not concerned of the consequence of the late delivery as well as poor quality.
Rules and Regulations: There are also no written rules and regulation for operating this industry. As a result, people involved in this industry operating their business according to their willingness.
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This means delivering goods with inappropriate quantity. This is a very common problem for all Buying Houses. Garment manufacturers of our country are the victim of many natural contingence including strike, hartal or political instability: So a result they often fail to finish their on time which result short shipment. Due to this short shipment respective buyer become dissatisfied with the Buying House and the Buying House loses that buyer forever.
Another important problem of Buying House is the poor quality of its supplier (garment manufacturer). Desired quality is the first condition of the foreign buyers to the Buying Houses. Garment manufacturers due to their unskilled worker cannot produce the product with expected quality. As a result buyers reject the product.
Improper document:
At the time of releasing goods from the port, a buyer needs to show some documents such as ... to prove his authentication. These documents are send to buyer from buying house or the respective supplier. However, sometimes due to lack of experience or knowledge they sometimes fail to send appropriate documents for which the buyer cannot discharge his goods from the port. As a result the buyer becomes dissatisfied with the buying house.
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Document Delay:
Besides improper document, some times the supplier or buying house fail to send documents on time. With out proper document the foreign buyer cannot discharge goods from the ship. This problem is very irritating to buyer as the product has arrived at the port but due to unavailability of proper document he is unable to discharge goods from the port. For this reason sometimes the buying house has to break relationship with its buyers.
This problem mainly occurs due to unethical practices of few people. Normally, the amount of the commission of buying house is specifically written at the back of letter of credit. So, no body can deny to pay the corn mission to the buying house. However sometimes due to ill intention of the people of bank the buying house face difficulties to receive its commission.
Other Problems:
As the buying house is related with garment export, any problem occur in any stage of export channel from manufacture to distri. bution ultimately becomes the problem of Buying House. Thus the following problems of garments export can be consider as an indirect problem of buying houses.
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Problems regarding exporting garments through air: 1. Open cargo shade. 2. Lack of security. 3. High royalty rates. 4. Handling system. 5. Problem of damaged cargo inspection and not allowing of short landing and short deliver certificate. , 6. Tempormy bonded warehouse for garment industry at the airport.
Problem in banking sector for exporting: 1. Force / demand loan. 2. Back to back P.A.Djforce loans. 3. Overdue F.B.P. 4. Exporter cannot open the LjC due to clear the liability. 5. Stock-lot problem cannot permit BBL/C open. 6. Banking irregularities. 7. Bangladesh Bank does not provide enough money for cash incentive. 8. Need the separate bank for generals industry 9. ECG policy. 10. Exporting goods against stock lot. 11. 20% discount is not allowed in the National Bank. 12. Bangladesh Bank does not relax the discount amount. 13. L/C acceptance charges of the commercial bank. 1.4. Procedure of making down payment for rescheduling loans.
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RECOMMENDATION
After recruitment of employee, buying house should provide them three t6 six month training to learn the technical work to perform the technical job such as the job of merchandiser, quality controller, quality inspector, sample maker etc.
The buying house should provide money to its employee to develop' communication skill in particular language in order to communicate with a particular buyer for the buying house.
Instead of full autocracy or democracy, the employers of buying house should show lenient view in all aspects so that they get motivated to work.
Employee pay structure should be consistent with the employee . work pressure, in order to stop their tendency to switch job.
Buying house should introduce service bonus or service benefit in order to encourage and motivate their employee.
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Having no visions of prospects the buying house industry in our country is bound to suffer from the worst deterioration with their withdrawal of quota system. So the only remedy to develop this scenario is to strengthen their infrastructure through combined effort of both govemment and non-govemment for proper support and facilities.
Encourage people to develop industry such as threat, button, interlining and other packing materials treated as backward linkage industry of garment export by make short term or long term contract of taking goods so that buying house do not have to import those at higher price or the local supply can the fulfill the required demand of the industry.
Government of our country should also provide incentives to develop backward linkage industry of RMG export, for the smooth supply of accessories by buying house to garment factories.
Company owned accessory supplier can also the developed to maintain quality or on time delivery.
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Buying house should be more careful and attentive in monitoring the production of the garment manufacturers so that production goes on schedule and any unwanted occurrence such as short shipment may not occur due to late delivery.
In the findings T have mentioned that buyers do riot want to negotiate on quality. So, maintaining product quality for buying house is very important. To maintain appropriate quality, buying house should take necessary steps such as training course for their quality controller or inspector etc.
For improper document or document delay buyers cannot receive his product from the ship in his country for which relationship between he and buying house may break up. So buying house should be always careful in preparing right documents. They also should send documents at right time.
The total industry should keep in mind that they need a truly international outlook for exporting to attract buyers as well as long-term commitment with both of their buyers and suppliers.
The total industry must achieve an international reputation for quality to challenge the quota free environment.
They should ensure that they have all the resources for garment export.
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Requirement of obtaining approval from Bangladesh Bank for creating Forced/Demand loan by the lien banks should be withdrawn.
Back to back A.D/Force loans should not be considered as default loans. Loans of this nature should be converted into interest free block Accounts and amortized against future proceeds.
The overdue F.B.P created against the liability of any L/C should also not be considered as default loans.
Exporters failing to clear the liabilities in case of Back - to back P.A.D / Forced Loans, overdue F.B.P e.c.t. Should be allowed to open L/Cs.
Bangladesh/bank should provide the lien banks with adequate funds for necessary payment of cash incentives to our exporters without delay.
Procedure of obtaining prior permission from Bangladesh Bank for exporting goods against stock-lot should be withdrawn.
Negotiation Bank should be authorized to take into consideration for deciding upon discount unto 20%.
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Condition for obtaining approval for discount from the Bangladesh Bank should be relaxed and discount approval by the EPB should be treated valid. "
From the date of document negotiation, forty-five days should be allowed for fund remittance. Overdue interest should not be charged in the event if remittance is delayed.
All private sector commercial banks should immediately cease charging L/C Acceptance charges like the nationalized Banks of the country.
Fresh laws should be enacted announcing that the Banking Co1J1panies Act passed by, the Jatio Shangsad (The parliament of the country) on 13th March 1997 is not applicable to the export-oriented RMG sector of the country.
Procedure of making down payment for rescheduling loans should be withdrawn. It should be rescheduled in accordance with the applications, when submitted, by the exporters concemed. In such cases, the rescheduled amount may be adjusted by charging @ 20/0 on the future exports proceeds. Legal action may be taken in case any of the exporters fail to adjust the dues after three consecutive rescheduling.
In case of Stock lot, the requirement for submitting statement by the commercial banks to the NBR should be waived.
RMG exporters should not be held responsible if proceeds against their exports are not realized owing to the reasons beyond their control.
To strengthen the security in cargo shade of Airport forming and to take necessary steps to exporting through air at the pick time of RJVIG.
To waive the high royalty rates at specific times of the tear so that the emergency import of raw material and export of readymade garment could remain steady.
To formulate a joint action plan with the chairman of the BG MEA standing committee on port and transport.
Duty free market access should be allowed for essentially all products exported by the LDC's on a non-reciprocal basis to improve their economies.
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Definition of merchandising
The term merchandising related with trade Trade means buying & selling The person who merchandiser And the activities merchandising is involved with trade, he/she is a
of
merchandiser
is
known
as
Place order to different production unit Collect Daily Production Report &Daily Quality Report If any shortage in store, arrange locally. Arrange final inspection Arrange final inspection
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Order confirmation L/C opening Opening summery Sourcing Material collection Production planning Production monitoring Quality assurance Arrange final inspection Arrange shipment
Qualities of a merchandiser Language skill Computer skill Marketing skill Right consumption knowledge of various goods Costing knowledge of raw materials Order getting ability (That is if the merchandiser is known by actual rate of raw materials, so that he can negotiate perfectly with buyer. In this way, the possibility of getting order is hundred percent.) Sincere& responsible Hard worker
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The most critical work is the procurement of garment export order. Normally garment export order is found from the potential garment importers called garment buyer. Anybody wants to collect garments export order, should be able to convince the buyer. When the buyer is convinced about garment production, garments quality, garments costing and shipment ability of a garments exporter, he or she can think about issuing a garments export order. Without clear confidence among buyer& exporter from both sides, may be a risky business deal. If a garment exporter can continuously deal with only three or four buyer with buyers satisfaction, it will be sufficient enough to run garment production & garment export business smoothly round the year.
A successful negotiation outcome does not generally occur through luck, but by following a clear process. The process reflects the different levels of knowledge of the subject of negotiation, various parties and the way they communicate at various stages in the negotiation. The following is an outline of steps essential to effective negotiation: order size Lead- time. This is the real bargaining where elements of the order, such as number of units, product details, lead-time and so on are being decided in the context of an overall cost price the buyer should make firm proposals.
Processing of order
Execution of garments export order After receiving the garment export order, without wasting any time, it is essential to prepare a schedule for the jobs to be done for safe execution of the export order. The main jobs for the execution of an export order are as follows: Details analysis of export L/C Preparation of a time schedule for the export L/C
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Collection of fabric& accessories for the garment to be exported[source, quantity of the items, cost of the items, receiving data of the items, quality& quantity, Inspection of the items, etc] Distribution of responsibilities for the jobs & duties Production plan Inspection of the produced garments for quality, quantity, packing & other requirements of the buyer. Preparation of banking & shipment formalities Continuous follow-up progress Others.
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b) Sewing & seam allowances (Not given by buyer) 1.50-3cm c) Wastage % (Not given by buyer) 7% d) Measurement chart (given by buyer)
Measurement Chart:
Parameter a) Chest b) HPS c) sleeve length d) Arm hole e) Neck f) Neck width g) Bottom hem Given 96cm 65cm 20cm 46cm 58cm 2+2=4cm 2cm Estimated with sewing allowance 102cm 70cm 25cm 49cm 61cm 7cm
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Formula:
Cpd = L x W x 12 x GSM kg 10000000 Where, Cpd = Consumption per dozen L = Length W = Width A) Cpd (body) = L x W x 12 x GSM 10000000 = 70 x 102x 12 x 150 10000000 = 1.28 kg B) Cpd (Sleeve)
kg kg
= L x W x 12 x 2 x GSM kg 10000000 = 25 x 49 x 12 x 2 x 150 kg 10000000 = 0.44 kg = L x W x 12 x GSM kg 10000000 = 61 x 7 x 12 x 180 kg 10000000 = 0.092 kg = (A + B+C) = (1.28 + 0.44 + 0.09) kg = 1.81 kg = Total Cpd + 7% wastage = (1.81 + 7%) = 1.94 kg
C) Cpd (Neck)
So, the fabric consumption for mens T-shirt is 1.94 kg per dozen.
Measurement Chart:
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Parts Name a) Chest b) HPS c) Sleeve length d) Arm hole e) Collar length f) Collar width g) Cuff length h) cuff width A) Cpd (body)
Given 96 cm 65 cm 20 cm 46 cm 46 cm 7 cm 26 cm 3 cm = L x W x 12 x GSM kg 10000000 = 70 x 102x 12 x 150 kg 10000000 = 1.28 kg = L x W x 12 x 2 x GSM kg 10000000 = 25 x 49 x 12 x 2 x 150 kg 107 = 0.44 kg = L x W x 12 x GSM kg 7 10 = 46 x 10 x 12 x 400 kg 7 10 = 0.22 kg = L x W x 12 x GSM 107 = 46 x 10 x 12 x 400 107 = 0.22 kg kg kg
B) Cpd (Sleeve)
C) Cpd (Collar)
C) Cpd (Collar)
D) Cpd (Cuff)
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Actual Cpd = 2.05 kg + 7% = 2.19 kg So, fabric consumption for 1 dozen polo shirt is 2.19 kg.
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Measurement Chart:
Parts Name a) Waist b)Side seam (length) c) Thigh (width d) Front rise e) Back rise f)Leg Opening (bottom) Given 112 cm 107 cm 66 cm 28 cm 36 cm 46 cm Estimated 114 cm 114 cm 72 cm
Cpd
= L x W x 12 x GSM kg 107 = 114 x 2 x 72 x 12 x 200 kg 107 = 3.93 kg Actual Cpd = (3.93 + 7%) kg = 4.2 kg So, fabric consumption for 1 dozen Trousers is 4.2 kg.
COSTING:
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Total $14 A) Direct cost (raw materials) B) Indirect cost (15% to 20% of direct cost) Indirect cost Total = $14.0 x 20% = $2.8 = $14.0 + $2.8 = $16.8 C) Profit @5% = $16.8 x 5% = @0.84 = $14.0
Therefore, total cost = $16.8 + $0.84 = $17.64 = $18 So, the cost for 1 dozen means T-shirt is $18
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= $21 = 15% - 20% of direct cost = $21 x 20% = $4.2 =A+B = $21 + $4.2 = 25.2 = $25.2 x 5% = $26.46 = $26.5
Total cost
C) Profit at 5%
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1 1 1 1 1 1
Meter = 1.09 Yard Meter = 3.28 Foot CM = 0.032 Foot CM = 0.393 Inch Square Inch = 6.45 Square CM Square Meter = 0.836 Square CM
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Papers hang tag : 10 cent-1 dollar. Price tag Poly bag Carton : 10 cent-60 cent : 30cent-1dollar (Depending on size & thickness) : 65 cent- 1.5 dollar
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Trims
: 70-85 cent ( per cone) : 1.2-2.5 dollar/grows (144 pcs=1 grows) : 80 cents-1.5 dollar/grows 6 dollar8 dollar/gg
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Zipper
(Note: the price is depend on the basis of zipper quality that is cotton, nylon, polyester etc)
Packing Accessories
The Accessories which are used for garment packing during garment shipment to buyer are called packing accessories. Packing accessories are depended on garment packing and folding etc which is instructed by buyer. Poly bag, packing board, tissue paper, hanger, scotch tape, gum tape, carton etc are part of packing accessories. Packing should be varying (as per buyer garment packing instruction) in different orders as per instruction of buyer garments packing. , The number of one carton garments it is weight on depend carton quality. Understand quality of carton follow 3 ply, 5 ply, 7ply. The number of carton is high ply number it is very much it is hard and strong. The sea frights depend on dimension of the export carton and the air frights depend on dimension of the export carton or gross weight of the carton.
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2. DEPEND ON STITCHING : 1. Stitching Carton 2. Now stitching /Gum Pasting Carton Or Metal Free Carton 3. DEPEND ON PLY : 1. 3 Ply Carton 2. 5 Ply Carton 3. 7 Ply Carton : 1. Both Side Liner Carton 2. out Side Liner Carton : 1. Master Carton 2. Inner Carton
CARTON MEASUREMENT:
FORMULA (1) = (L+W) (W+H)X2 in cm (Without Wastage) 100X100 FURMULA (2) = (L+W+6) X (W+H+4) X 2/10000 (Include Wastage) PRICE = (L+W) (W+H) X 2 x Rate per Square Meter 100x100 = Rate/Pc
Example: Here,
L=30, w=40, H=20, From (2) = (30+40+6) X (40+20+4) X2/10000 = 0.97 Square Meter. Rate for 7 PLY = .55 USD [For GMTS Export Natural 7 Ply Used 5 PLY = .39 USD (.55X 5/7) (Less Wt Master Carton) 3 PLY = .23 USD (It is used as inner carton) NOTE: Some time some buyer wants top & bottom inside in the carton. It should be in 3 Ply. CARTON: 125
Carton should be made of 7 ply to be exported. Carton is tested by carton bursting machine.
"BUTTON"
40 Line =1 inch =2.54 cm=25.4 mm 1 line =0.635 MM
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2. METAL: BRASS, ANTIC BRASS, NIKEL BRASS, ALUMINIUM, PEWTER. 3. PLASTIC ON DERLIN: IVORY, TRANSLUCENT, SHINY GOLD, SILVER RAINBOW.
QUALITY:1. 2. 3. 4. 5. 6. 7. 8. AZO Free NICKEL Free Non magnetic. Non toxic Zipper teeth is not shrink so zipper tape S/B shrink free. FBRIC S/B max 3% Shrinkage otherwise garment like wavy & difficult for the zipper Slider To go up and down .
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GB : Golden Brass Zipper AL : Aluminum Brass Zipper NI : Nickel Zipper. 2. FUNCTION : 0(0/E) : OPEN -END C (C/E) : CLOSED -END M(2 WAY) : 2 WAY OPENED EXAMPLE : PZC # 5: Plastic Zipper No 5 , Closed end PZM # 8: Plastic Zipper No 8 , Way Open End GKO # 5: Metal ,Antique Brass No .5 Open-End Open -end zipper are used generally in the front of garments closedends in pockets , hoods legs of garments.
3. POSITION OF SLIDER:
L/S: Left Slider (Same as R/H-Right Hand) Mens When a Jacket in Opened the Slider remains at the left Side of the user. R/S: Right Slider (Same as L/H-left hand) USE: L/S: IN Europe & Asia both male & female -IN USA Generally female. R/S: IN USA, Canada, South American Countries
SOME SPECIAL ZIPPER:1.REFLECTIVE ZIPPER 2.INVISIBLE zipper : In this type teeth are not show frontout . 3. 2 way slider zipper : 1. 0 Type : Two end is closed so when two slider come toward then it shape like "0 ". 2. x Type : Two end is open so when two slider come toward then it shape like x. 3. R Type : One End is closed other is open when two slider come towards then it shape like R.
SL# 1 2
3 4 5 6 7 8 9 10 11 12 13 14 15 16 17
COMPOSITION LABEL 1PCS SEWING THREAD HANG TAG PRICE TAG BAR CODE STICKER POLY BAG GUM TAPE SCOTCH TAPE P.P- BAND METAL CLIP CARTON COST OF MAKING TOTAL PRODUCTION COST OVERHEAD COST 4% PROFIT 10% TOTAL PRICE FOB CHITTAGONG.
.02/PCS
0.02
NOTE: GUM TAPE=1 ROLL=50 YDS SCOTCH TAPE=1 ROL=25 YDS METALCLIP=1 BOX=200PCS ALPIN=1 BOX=500PCS TISSUE PAPER=1 BUNDLE G.G=GREAT GROSS=1GG=1728PCS CONE=1 CONE=500METERS
Sample making
According to buyer requirement the sample is developed in sample section. The sample should be accurate to get approval.
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2Knowledge about faults Barre : occurs in circular knit. Caused by mixing yarn on feed into
machine. Fabric will appear to have horizontal streaks. Broken Color Pattern: Usually caused by colored yarn out of place on frame. Color Out: the result of color running low in reservoir on printing machine. Crease Mark: differs from crease streak in that streak will probably appear for an entire roll. Crease mark appears where creases are caused by fabric folds in the finishing process. On napped fabric, final pressing may not be able to restore fabric or original condition. Often discoloration is a problem. Drop Stitches: results from malfunctioning needle or jack. Will appear as holes or missing stitches. End Out: Occurs in Warp knit. Results from knitting machine continuing to run with missing end. Hole: caused by broken needle. Knots: caused by tying spools of yarn together. Missing Yarn: Occurs in warp knit. Reuslts from wrong fiber yarn (or wrong size yarn) placed on warp. Fabric could appear as thick end or different color if fibers have different affinity for dye. Needle Line: Caused by bent needle forming distorted stitches. Usually a vertical line. Pin Holes: Holes along selvage caused by pins holding fabric while it processes through tenter frame.
Care instructions
Machine Wash Cycle Icons: What it means: Regular/Normal Cycle with regular agitation and spin speed may be used.
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Use Permanent Press/Wrinkle Resistant washer setting (which has a cool down or cold spray before the reduced spin). Use Gentle/Delicate washer setting (slow agitation and/or reduced wash time). Hand wash only.
Do not wash. Do not wring by hand or use rollers on wringer washer. Hang dry, drip dry or dry flat.
Water Temperature
Icons: What it means: Maximum water temperature 200F/95C. Maximum water temperature 160F/70C. Maximum water temperature 140F/60C. Maximum water temperature 120F/50C. Maximum water temperature 105F/40C.
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Press/Wrinkle
Resistant
Cycle
Heat Setting
Icons: What it means: Set dryer at any heat. Set dryer at High heat. Set dryer at Medium heat. Set dryer at Low heat. No heat/air.
Special Instructions
Icons: What it means: Line dry/hang to dry - hang damp from line or bar and allow to dry. Drip dry - hang wet on plastic hanger and allow to dry with hand shaping only.
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Bleach Symbols
Icons: What it means: Use any bleach (when needed). Use only non-chlorine bleach (when needed).
Do not bleach.
Iron - Dry or Steam Icons: What it means: Iron - Ironing is needed. Iron using High temperature setting. Iron using Medium temperature setting. Iron using Low temperature setting.
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Do not dryclean.
No steam finishing.
PURPOSE OF QUALITY CONTROL.
It It It It It It It
will affect the sale ability of the product. will affect the service ability of the product improves the manufacturing quality will help to certify the performance of the company. will help to maintain total commitment to organized design. will help to reduce wastage of goods will help to get better order from buyer.
Types of L.C.
Various types of L.C. are present in business system. Some recognized processes are
1) MASTER /MOTHER L.C 2) BACK TO BACK L.C 3) SIGHT L.C 4) DEFFERED L.C 5) revocable l / c 6) irrevocable l / c
l / c
is mainly
In this trade initially cash money is not used. L. c is the main process for buying & selling. When a business deal is made for buying & selling between buyer & merchandiser then the buyer gives permission to his bank to open an L.C. of approx amount & send it to merchandisers bank. Then this bank informed to merchandiser that an L.C. is accepted. This l .c is called MASTER L.C. THEN MERCHANDISER takes decision about the manufacturer for collecting raw materials .when merchandiser choose supplier then he tell the supplier to send a pro-forma invoice. After getting p .I. merchandiser tell to his bank to open an l .c send to the suppliers bank. This l. c is opened from mother
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send a acceptance copy to his bank & a copy to the supplier. Then the supplier can able to get cash from his bank. At the same way merchandiser send the product to the buyer or after shipment he also able to get cash from bank. Shipment of goods is done by B.L (bill of leading).this system is called SIGHT L.C.SIGHT L.C. consists of MASTER & B TO B L.C.
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FOB :FREE ON BOARD (Free on Board) is simply the Supplier delivers the goods to his nearest Port and hands them over to the Freight Forwarder nominated by the Buyer. Buyer then pays the freight and arranges Insurance
CNF
CIF : COST INSURANCE & FREIGHT (Cost Insurance Freight) means that the Supplier delivers the goods to his own Freight Forwarder who then ships the goods to the destination Port. Seller pays freight and insurance. From a Buyer's point of view, CIF is better as he does not have to worry about arranging shipping from Supplier to his home Port.
DDP
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DDU
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CM
This refers to the manufacturing cost and this term means "cut and make". The buyer supplies all the materials to the manufacturer.
CMQ
This term means "cut, make and quota" and is similar to 'CM' except that the manufacturer has to supply the quota as well.
CMT
The term means "cut, make and trim". The buyer provides the fabric, and the supplier makes the garments.
CMTQ
The term means "cut, make, trim and quota". The buyer has to provide the fabric and the manufacturer makes the garments as well as provides the quota.
FOB
This term means "Free On Board". The supplier is responsible for all charges (including export licences, export 156
taxes, etc.) and risks until the goods have passed over the ship's rail at the port of shipment; the merchandise must be cleared for export. The buyer contracts and pays for the freight and bears all risks for loss or damage to the goods as soon as the merchandise passes the ship's rail. The buyer also pays for all import duties and clears the goods through customs at the point of destination.
Export Licence
In Hong Kong, export licences are needed for all garments and textile products. The licences are issued by the Trade Department.
Packing List
This is a document that indicates the contents of each individual carton/ package in the container. The packing list includes the cubic measurement of the cartons/package, the weight, the number of cartons/packages, the breakdown of the goods by size/colour/quantity. This document is prepared by the seller or the ship owner, and the buyer can specify which information should be included.
2. The evidence of the contract of carriage of the goods between the shipper of the goods and the shipping company 3. The document of title to the goods 157
a description of the goods in general terms not inconsistent w that in the letter of credit identifying marks and numbers, if any the name of the carrying vessel evidence that the goods have been loaded on board the ports of shipment and discharge the names of shipper, consignee (if not made out "to order"), a name and address of the "notifies" party if any whether freight has been paid in advance or is payable destination the number of original bills of lading issued the date of issue the departure date of carrying vessel or aircraft
Types of B/L
STRAIGHT BILL O LADING NON NEGOTIABLE BILL OF LADING. CONSIGNED DIRECTLY TO IMPORTER. CONSIGNED DIRECTLY TO THIRD PARTY. NEEDED FOR DOCUMENTS AND. REVENUE PURPOSE.SHORT SHIPMENT AND ADVANCE. NON NEGOTIABLE OF LADING. CONSIGNED DIRECTLY TO THIRD PARTY. HARD COPY IS NOT REQUIRED BY SHIPPER.
SHIPPING TERMS
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Consignee
The person whose name appears on the bill of lading or airway bill as the party to whom the goods are to be delivered by the carrier.
Shipper
This is the person whose name appears on the bill of lading or airway bill as the party who has contracted the carrier to dispatch the goods.
Shipping Marks
These are marks essential to identifying cargo and linking that cargo with specific documents. Because these marks are important as identifiers, the marks and numbers should be as simple as possible. Shipping marks include the abbreviated name of buyer, reference number, destination, package number, and container number (if applicable).
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Flat Packed
The goods are packed into cartons.
L.P.
OF
BANGLADESH
(NOTES) (1) As declared by Shipper and not acknowledge by Carrier (2) Said to contain
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Chapter :10
Conclusion
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Conclusion
Bangladesh economy at present is more globally integrated than at any time in the past. The MFA phase-out will lead to more efficient global realignments of the textile and clothing industry. The phase out was expected to have negative impact on the economy of Bangladesh. Recent data reveals that Bangladesh absorbed the shock successfully and indeed RMG exports grew significantly both in FY05 and (especially) in FY06. Due to a number of steps taken by the industry, Bangladesh still remains competitive in RMG exports even in this post phase-out period. Cheap labor is no longer seen to be a mainstay of comparative advantage. The need for establishing strong backward linkage was appropriately realized and accordingly necessary steps were taken by all quarters of the RMG industry, which has been reflected in the decreased pattern of back-to-back import supported by increased domestic value addition. However further progress is in order, and a strong public sector role is necessary to mediate the establishment of textile mills with global standards. An appropriate policy regime is needed to encourage the importation of technology, intermediate and raw materials, so that the local industries get a chance to reduce its average cost to international level and narrow the lead time. Presently, Bangladeshs apparel sector operates mainly at the lower-end segment of the international market. Although knitwear products achieved tremendous growth but these are low-value products with small profit margins. Bangladesh can enhance its value addition capacity substantially through diversification of apparel products and by moving into more value-added, high-priced, high-fashion products. Woven category can be more attractive via large capital investment. If cost effective investment can increase in the spinning and weaving sub-sectors, as it has been in the past few years, Bangladesh has the possibility of building a competitive exportoriented RMG sector with strong backward linkages in the textiles sector. Training is always considered as an effective instrument for upgrading skills and raising efficiency of human resource, which eventually ensures increased productivity. Some initiatives have been taken by the entrepreneurs of the relevant sector but much more needs to be done. Necessary steps should be taken both by the public and the private sectors, and development partners to establish appropriate fashion and technology institutes. Improvement in working conditions and organizational environment can also result in increased productivity, which eventually renders these enterprises more competitive. To remain competitive in the post-MFA phase, Bangladesh needs to remove all the structural impediments in the transportation facilities, telecommunication network, and power supply, management of seaport, utility services and in the law and order situation. The government and the RMG sector would have to jointly work together to maintain competitiveness in the global RMG market. Given the remarkable entrepreneurial initiatives and the dedication of its workforce, Bangladesh can look forward to advancing its share of the global RMG market.
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Chapter ; 11
References
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References
1.Books of Ahmed, Khandker habib(2002) Textile and clothing : Experience of contemporary leading countries. 2.Backward Linkage to ready Made Garments Bangladesh Perspective. 3.Hanif g. A. Siddiqi (2004) The Readymade garment Industry of Bangladesh. 4.Bangladesh Garment Manufacturers and Exporters Association (BGMEA) (2005): RMG sector and challenges of 2005 keynote paper presented at the BATEXPO 2000, sponsored by BGMEA, Dhaka. 5.Bangladesh Textile Mills Association (BTMA) (November 21,2001) textiles of Bangladesh, Dhaka. 6.Regional News .(August 21,19970. Massive cotton seeds farming programme in 4 dist. The Daily Star, Volume 1, Number 9. 7.Export Promotion Bureau (EPB), (March 2007) statement of monthly export by ministry of commerce Retrieved June 30, 2008 http://www.epb.gov.bd/bangladesh epz.html
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