1

GLOBAL Marketing

Country for Project:

BANGLADESH
NAME: ADNAN-ALI
CLASS: BBA-20 A

2680

Table of Content
INTRODUCTION...3 Background...3 Economy...4 Bangladesh, the land of textiles: Review & Outlook..6 Current Situation of Textile Industry in Bangladesh........6 Structure of the textile industry in Bangladesh.....7 World cotton outlook Bangladesh perspective.....8 Textile Industry Outlook.......9 Garments Industry Outlook......9 The spinning industry......10 Market Analysis...11 Country specific advantages....15 Comparative advantage of the Republic of Bangladesh....15 Porter diamond model.17 Company Taken From the Textile Industry..............20 A company within the BEXIMCO group....21 BEXTEX Ltd...21 Firm specific advantages...23 Porters Five Forces....23 SWOT Analysis of BEXTEX PVT Limited.....26 Company Destination ...............................................26 India .......30 Why India........31 SWOT analysis of Indian textile industry.....32 Mode of entry....33

Bangladesh

INTRODUCTION Background:
Europeans began to set up trading posts in the area of Bangladesh in the 16th century; eventually the British came to dominate the region and it became part of British India. In 1947, West Pakistan and East Bengal (both primarily Muslim) separated from India (largely Hindu) and jointly became the new country of Pakistan. East Bengal became East Pakistan in 1955, but the awkward arrangement of a two-part country with its territorial units separated by 1,600 km left the Bengalis marginalized and dissatisfied. East Pakistan seceded from its union with West Pakistan in 1971 and was renamed Bangladesh. A military-backed, emergency caretaker regime suspended parliamentary elections planned for January 2007 in an effort to reform the political system and root out corruption. In contrast to the strikes and violent street rallies that had marked Bangladeshi politics in previous years, the parliamentary elections finally held in late December 2008 were mostly peaceful and Sheikh HASINA Wajed was elected prime minister. About a third of this extremely poor country floods annually during the monsoon rainy season, hampering economic development. Location: Southern Asia, bordering the Bay of Bengal, between Burma and India Area: Total: 143,998 sq km Country comparison to the world: 95 Land: 130,168 sq km Water: 13,830 sq km

Natural resources: Natural gas, arable land, timber, coal

Land use: Arable land: 55.39% Permanent crops: 3.08% Other: 41.53% (2005)

Government Country name: Conventional long form: People's Republic of Bangladesh Government type: Parliamentary democracy Capital: Name: Dhaka Geographic coordinates: 23 43 N, 90 24 E Time difference: UTC+6 (11 hours ahead of Washington, DC during Standard Time) Administrative divisions: 7 divisions; Barisal, Chittagong, Dhaka, Khulna, Rajshahi, Rangpur, Sylhet Independence: 16 December 1971 (from West Pakistan); note - 26 March 1971 is the date of independence from West Pakistan, 16 December 1971 is known as Victory Day and commemorates the official creation of the state of Bangladesh

Economy
Economy - overview: The economy has grown 5-6% per year since 1996 despite political instability, poor infrastructure, corruption, insufficient power supplies, and slow implementation of economic reforms. Bangladesh remains a poor, overpopulated, and inefficiently-governed nation. Although more than half of GDP is generated through the service sector, 45% of Bangladeshis are employed in the agriculture sector with rice as the single-most-important product. Bangladesh's growth was resilient during the 2008-09 global financial crisis and recession. Garment exports,

totaling $12.3 billion in FY09 and remittances from overseas Bangladeshis, totaling $11 billion in FY10, accounted for almost 12% of GDP.

GDP (purchasing power parity): $283.5 billion (2011 est.) Country comparison to the world: 46 $266.2 billion (2010 est.) $250.1 billion (2009 est.) Note: data are in 2011 US dollars GDP (official exchange rate): $112 billion (2011 est.) GDP - real growth rate: 6.5% (2011 est.) Country comparison to the world: 39 6.4% (2010 est.) 5.9% (2009 est.) Labor force: 75.42 million Country comparison to the world:7 Note: extensive export of labor to Saudi Arabia, Kuwait, UAE, Oman, Qatar, and Malaysia; workers' remittances were $10.9 billion in FY09/10 (2011 est.) Labor force - by occupation: Agriculture: 45% Industry: 30% Services: 25% (2008)

Agriculture - products: Rice, jute, tea, wheat, sugarcane, potatoes, tobacco, pulses, oilseeds, spices, fruit; beef, milk, poultry Industries: Jute, cotton, garments, paper, leather, fertilizer, iron and steel, cement, petroleum products, tobacco, drugs and pharmaceuticals, ceramic, tea, salt, sugar, edible oil, soap and detergent, fabricated metal products, electricity and natural gas Exports - commodities: Garments, knitwear, agricultural products, frozen food (fish and seafood), jute and jute goods, leather

Bangladesh Export Partners

The following were Bangladeshs export partners as of 2011: US Germany UK France Italy Spain Netherlands 19.4%, 16.5%, 10%, 7.3%, 4.4%, 4.2%, 4.2%

Imports - commodities: Machinery and equipment, chemicals, iron and steel, textiles, foodstuffs, petroleum products, cement

Bangladesh Imports Partners

The following were Bangladeshs import partners as of 2011: China India Malaysia 18.2%, 13.5%, 4.9%

Bangladesh, the land of textiles: Review & Outlook

Current Situation of Textile Industry in Bangladesh Over the past five years, Bangladesh has enjoyed an average real GDP growth of six percent. It is mostly because of the labor-intensive industries; in particular textiles and garments have fueled growth as Bangladeshs tremendous reserves of cheap, considerably-skilled labor have attracted foreign investment. Bangladesh is now actually a very important hub of the worlds textiles market. However, 2011 was a tough year for the textile industry of Bangladesh as the cotton price played a rapid changing game throughout the year. But good news as the cotton and yarn price has become quite stable at the end of 2011 and the textile industries are coming round from their ill conditions during that period. The Garments export is also showing good growth although it was

lying below the target in the last six months expectation from EPB due to the sign of economic recession in the major exporting regions of the country. Hence it is important to move smartly and be ready to avoid any upcoming turmoil. In this regard Bangladesh Textile Today has decided to make a review of the textile & RMG industry of Bangladesh to make an outlook for the upcoming year.

Structure

of

the

textile

industry

in

Bangladesh

Bangladesh is now the second biggest exporter of readymade garments in the world. The textiles industry is contributing around 12% of the national GDP. Around 40% value addition of manufacturing sector comes from textiles. It is possible only because, the industry has developed a strong backward linkage to support the fast growing demand from the garments sector. Over the years significant development has taken place in the textile sector. The investment in the primary textile sector is worth of 5 billion USD.

The size of the textile sector under BTMA (BTMA annual report 2011): Sub-sector SL 1 Spinning No. of units 385 Installed Production Capacity Capacity in a year 8.7 million 2050 million kgs spindle 0.23 million rotor 17250 shuttle less 2150 million meter 13500 shuttle

Weaving/Fabric manufacturing 1. 2. 3. 4. Weaving Denim Home Textile Knitting

721 584 20 17 100

3 4

Dyeing-Printing-Finishing 233 Export oriented garment industry 5150

2200 million meter 561 million dozen

However, there are 1700 knit-composite industries under the Bangladesh Knitwear Manufacturers Association who are making their own fabric to feed their garment industries. The primary reason for faster integration in knit sub-sector is relatively low investment requirements. For example, a knit fabric manufacturing, dyeing and finishing unit of a minimum economic size could be set up in Bangladesh at a cost of about USD 3.5 million while investment required to set up a woven fabric manufacturing plant of minimum economic size with

appropriate dyeing and finishing facilities cost at least USD 35 million, which ten time higher than the knit plant. Among the 5000-5500 export oriented garments industries, 10% are settled in different EPZs. These EPZs are playing a very vital role in development of the apparel sector. Although most of the EPZ industries are garment producers but authority is giving priority to set up basic textile industries like spinning, weaving and dyeing finishing mills. Due to enormous success and keen interest of the foreign investors, government has allocated necessary land and other facilities for setting up two more EPZs. The main three EPZs are situated in Dhaka, Chittagong and Camilla. The textile industry provides 5.5 million of employment where 80% of them are women. It provides huge opportunities for supporting industries like- banking, insurance, shipping, transport, hotels and other related economic activities. 15 million people in support industries depend on this trade. The industry also provides 2 lakhs of jobs in the waste recycling industries. There are associations like BGMEA (Bangladesh Garment Manufacturers and Exporters Association), BKMEA (Bangladesh Knitwear Manufacturers & Exporters Association) and BTMA (Bangladesh Textile Mills Association) who are integrating their efforts to protect and uphold the interest of the industry by adding formulation of government policies consistent with a congenial growth of the sector.

World cotton outlook Bangladesh perspective

Bangladeshi textile industry is cotton dominating one. At least 90% of its production is of cotton and cotton blends. The country is the third largest cotton consumer of the world while its cotton production is not significant at all. Cotton agriculture and economy drives the countries industry greatly. The world cotton market is as volatile as a commodity market can be. Less production of cotton in USA and CIS countries and a devastating flood in Pakistan raised the price of cotton in 20102011. Although the situations have improved, world production of cotton is estimated nearly same as 2011. World cotton mill use is expected to continue recovering in 2011/12, driven by improving global economic growth, but high cotton prices and competition with polyester will

remain challenges. The US Secretariat projects world cotton mill use will up by 2% in 2011/12, to 25.5 million tons. Cotton mill use is expected to continue increasing in South Asia and South America, but to decline in most of Europe and North America. World cotton production estimated in 2011-2012(January) (Millions of 480 lb. bales) USA 15.7 China 33.5 India 34.5 Pakistan 10.0 Uzbekistan 4.2 World 122.8 (It was 115.3 in 2010-2011) As the chart shows the cotton price went up to a historic 220 cents/lb in the mid 2011 which has come down to around 1USD per pound. Bangladesh is estimated to consume 0.9 million metric tons of raw cotton this year. Bangladesh produced 48000 bales (10500 tones) from 32000 hectares in the year 2010-11 which is only 2% of the yearly demand. The main importing destination for Bangladesh has been Uzbekistan, India and USA. Uzbekistan is seeking new cotton buyers and wants to become a cotton sales center for Asia and the CIS after white gold supplies to Europe were essentially reduced. Uzbek side agreed to annually provide 200,000 tons of cotton to Bangladesh, promising a 15 percent discount on cotton fiber and seven-year tax-free regime from 2010.

Uzbekistan continues to be the principal supplier of raw cotton, enjoying 47 percent market share due to competitive prices and a short delivery period. But the Government of Uzbekistan has taken various steps to increase domestic use of cotton to enhance value addition to their textile productions. Therefore the volume of exportable cotton from Uzbekistan will shrink as the domestic consumption increases. Bangladesh should look for additional sources for a consistent and reliable supply. Indian, Pakistani and West/East African growths fulfill a portion of the total demand of Bangladesh, but the quality of these growths has always been a concern. For example, Indian and Pakistani cotton are plagued with contamination problems and lower micron ire. West African growths have also quality concerns.

Textile

Industry

Outlook

The textile industry in Bangladesh can be divided into three main categories public sector, handloom sector and the organized private sector. While the private sector is the fastest growing

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segment in the country, the handloom industry provides employment to a large segment of the population of Bangladesh, supplying huge quantities of fabric needed by the local market. But due to gas & power shortage and other infrastructural disadvantages the cost of production is 1520% more than the other competing countries like India, China, Vietnam, Cambodia and Pakistan. The Government introduced 25% cash assistance in lieu of duty draw back and bonded facility to boost up the backward linkage but it was gradually reduced to 15%, 10% & 5%. The withdrawal of 2-stage transformation and introduction of single stage transformation in the new GSP+ by the EU put the industry into serious trouble. Therefore the industry moved for a demand of an increase in the cash assistance and the Government declared special cash assistance of 5% in addition to existing 5%. This cash assistance is given to the spinning industries specially to offset the huge loss they made in September 2010 to mid-2011 to continue yarn supply to the local fabric industries using higher priced cotton but by selling yarn at a much lower rate.

The

spinning

industry

The spinning sub-sector of the primary textile sector (PTS) has been witnessing robust growth over the past decade due to growing demand for yarn from both the domestic textile market and the export-oriented ready-made garment (RMG) sector. The spinning sector meets around 100 percent of domestic yarn requirements, 85-90 percent yarn requirements for export oriented knitwear and 34-40 percent yarn requirement for woven ready-made garments (RMG). Additionally, a portion of domestic yarn production is supplied to home-textile, terry towel, and denim producers.

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The growth of the Bangladesh spinning sector over the last few years is given in the below table.

116 new spinning mills, each with a capacity of 25,000 spindles, will be established in the near future. Yarn production in FY 2009/10 was 731,000 tons up by 14 percent from FY2008/09 productions. In FY 2010/11 yarn production grown further to 774,000 tons. Yarn consumption is increasing at a good rate due to strong demand from the weaving and knitting sub-sectors. Due to larger domestic production, yarn imports in FY 2009 decreased to 230,000 tons from 240,000 tons in FY 2008. Yarn imports in FY 2010 also lower at 200,000 tons due to large carryover stock of domestic yarns. India continues to be the principal supplier occupying about 75 percent of the market share. The price of yarn has declined sharply from what it was at the mid of the last year. The price of 30 count carded 100% cotton yarn is now hovering around 3.5 dollars/kg which was over 5 dollar six months ago. Production Fiscal Year 2008/09 2009/10 2010/11 628,000 731,000 774,000 Consumption 818,000 880,000 940,000 * All values are in metric tons Deficit 190,000 149,000 166,000

Garments

Industry

Outlook

The garment industry has been acting as the backbone of the countrys economy as it earns about 80% of the total export revenue. The export value of the readymade garments grew three folds in just ten years and expected to touch 22 billion USD this fiscal year. In the fiscal year 2010-2011 countrys apparel export was 17.9 billion USD. Over the next three years, it can establish itself

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as the second biggest sourcing destination for overseas buyers, next to China, according to experts. The main factors acting behind this robust growth are the cheap labor cost, cheap resources compared to the competitive countries, falling attractiveness of China as a garment maker and supporting measures taken by the Bangladesh government. The preferential advantage to export in the EU is also helping the industry. The EU and the USA has been the main exporting destination accounting more than 50% of the total export. Total value of RMG exports to European countries rose to $10.5 billion in 2010-11 from $7.1 billion in 2009-10. RMG exports to the USA reached $4.6 billion in FY 2010-11, about 27 percent growth over the total RMG exports worth $3.6 billion in FY 2009-10. Germany alone has become a rising market for Bangladeshs readymade garments (RMG) in recent years, next to the largest market in USA show more than US$3.1 billion apparel exports to the largest economy of Europe last fiscal year, a sharp rise with 56 percent growth over $2 billion exports a year earlier (FY 2009-10). Market share is also growing in the new emerging markets. The chart shows the value of the total exports in last fiscal (2010-2011) countrywide. All values are in million USD.

Korean South UK Japan France Australia India Canada Mexico Chile China Russia Brazil Turkey Republic Africa 518 1700 247 1400 192 36 894 81 12 52 51 47 48 94 Bangladeshs export target for FY 2011-12 is $26.5 billion. The market is forecasted to be developed at an annual rate of 7 to 9 percent resulting in ten years time to an export value of approximately

13

US D 36 to 42 billion, thus the market will double by 2016 and nearly triple by 2020.

Market

Analysis

The incredible achievement of garment export from Bangladesh has outshined the most optimistic expectations as Bangladesh has positioned as the second largest readymade garment exporting country in the world in 2010 as per the statistics of WTO. After 2008 turmoil, the global clothing market clearly recovered as the market has grown 11.4% to USD 351.5 billion. Bangladesh acquired the second position by exporting USD 22.30 billion with a share only 4.6%. China is way in front of Bangladesh with a 36% share worth of USD 130 billion. After a better than expected performance in the FY 2010, the global apparel market is clearly signaling a slowdown which has already been visible by a fall in the USA import volumes in July-Sept 2011. Import from EU has also started declining from July, 2011. The over dependence in two major markets has been a major reason behind such demand shock.

14

FTA with India at the last SAARC meeting also propelled the export of apparel to India which is one of the biggest apparel market itself. After the free trade agreement the export volume grew three fold from the previous amount.

Bangladesh exported garments worth of $360 million in the last fiscal. Surprisingly in October after the FTA, the country has reported orders for readymade garment worth an estimated $90 million from India. So the order inflow in just one month is equal to one-quarter of the last years total export volume. It is expected that exports to India would touch the $2-billion mark over the next three years or so, going by the current trend.

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The primary textile sector is helping to increase the foreign currency retention. On the other hand the unorganized decentralized handloom sector plays a crucial role in the Bangladeshi economy today. At present more than 1.5 million people are directly or indirectly engaged in the handloom sector. According to Bangladesh Handloom board the sectors contribution to GDP is estimated at 15%. The figures directly indicate how this manufacturing sector is contributing to the socioeconomy of the country.

Country specific advantages

Comparative advantage of the Republic of Bangladesh
There are three synergic and intrinsic factors that triggered the textile boom in Bangladesh. They are resources, opportunities and policy decision. The resources include abundant labor forces, low cost energy and natural gas. Abundance in labor forces provides Bangladesh textile industry with a competitive advantage in producing labor intensive goods. Self-sustained domestic market of 140 million with a growth rate of 3% is also a great support for the industry. In recent years Bangladesh has shown a reasonable increase in per capita income and improved life styles for middle class. Above all the dedicated and sincere work force, which is eager to work extended work hour when needed to meet the production target is the key element to the success of

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Bangladesh textile industry. Bangladesh had had a tremendous opportunity to gain access to European and the U.S. market through MFA and GSM agreements for its Ready Made Garments (RMG). Bangladeshi entrepreneurs successfully took this opportunity to the fullest extent to expand and secure their markets. The policy decision made by the Government basically buoyed the textile growth. The Government policy of liberalization of the economy encouraged private sector The country is clearly blessed with some key natural resources, such as fertile land, rich coal, and plentiful natural gas. It is the major producer of raw jute, tea, and leather. In addition, the country's supply of labor - the main contributor in product manufacture - is not only plentiful, but also considered to be both competent and competitive. All of these are essential ingredients for establishing a strong economic base for the country, and for achieving further growth through trade and commerce. Low cost easily trainable labor is abundantly available in Bangladesh. Out of the total population of 127 million, the labor force comprises more than 50 million. Bangladesh is one of the three Asian countries (the other two being Sri Lanka and China) which offers unconditional 100 percent foreign equity or ownership in industrial investments. There is no restriction on issuing work permit to a foreign national. Bangladesh enjoys Most Favored Nation (MEN) status from a number of countries including the U.S.A. with whom bilateral treaty of trade and investment has been signed. As one of the least developed countries, Bangladesh enjoys Generalized System of Preference (GSP) facilities for favorable export to the U.S. Avoidance of double taxation agreements have been signed with Japan, U.K., Italy, Canada, Sweden, Malaysia, Singapore and the Republic of Korea. Legal protection to all foreign investments in Bangladesh is provided by an Act n of Parliament passed in 1980 against nationalization and expropriation. Non-commercial risks of investment in Bangladesh are also covered by the Multilateral Investment Guarantee Agency (MIGA),

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Foreign Exchange regulations have been relaxed to the maximum limit by the recent introduction of free convertibility of Taka, the Bangladesh currency. This has accelerated the free flow of international business transactions Repatriation of foreign capital investment along with profits/dividends has been made easy and simplified. Now no prior permission of any authority is required for such repatriation. Cost of land and energy prices are one of the lowest in the region, there is a huge proven and recoverable deposit (about 11 trillion cubic feet) of natural gas in Bangladesh. A potential reserve of 50-70 trillion cubic feet is known. Bangladesh has two seaports with modern facilities. Internal transport and communication system has vastly improved over the years.

Porter diamond model

1. Factor Conditions 2. Related and Supporting Industries 3. Demand Conditions 4. Firms Strategy, Structure and Rivalry

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1. Factor Conditions:
Factor conditions refers to inputs used as factors of production - such as labor, land, natural resources, capital and infrastructure. Factor conditions for Bangladeshi Clothing industry are skilled human resources and vast labor force, government supports for textile and clothing technological up gradation, creation of textile and clothing villages, special economic/export processing zones, duty reduction for the import of inputs/machines, incentive for use of local inputs, income tax reduction, etc. Labor Textile is a labor intensive industry. Since Bangladesh is a labor-abundant country. Because of the abundance of labor, the labor cost of Bangladesh is also very low compared to the other developing countries. The wages paid to RMG workers in Bangladesh are the lowest even by the South Asian regional standard, which can be easily understand from the following table-

CAPITAL With the growth of RMG sector, Bangladeshi entrepreneurs also acquired the expertise of mobilizing resources to export-oriented RMG industries. Foreign buyers found Bangladesh an increasingly attractive sourcing place. To take advantage of this cheap source, foreign buyers extended, in many cases, suppliers' credit under special arrangements. In some cases, local banks provided part of the equity capital. The problem of working capital was greatly solved with the introduction of back-to-back letter of credit, which also facilitated import of quality fabric, the basic raw material of the industry. RAW MATERIALS The textile industries in Bangladesh mostly depend on imported raw materials. Bangladesh imports raw materials for garments like cotton, thread color, Yarn, fiber, etc. This dependence on raw materials hampers the development of garments industry. Moreover, foreign suppliers often supply low quality materials, which result in low quality products. A large proportion of the raw materials for RMG are imported from countries such as India, China, America, Uzbekistan and Thailand under back-to-back letter of credit facility. Cotton production in Bangladesh was 7705 tones in fiscal year 2007-08. Next fiscal year of 2008-09 cotton production increase about 19.5% to 9200 tones. It is forecasted for the year of

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2009-10 cotton production 9500 tones while cotton consumption in the same year forecasted 669,500tones. It means that Bangladesh produces only 1.42% of its total demand of cotton.

2. Demand conditions:
The Bangladeshi textile industry within the country has helped in the creation of world-class market. The textiles and clothing industry is Bangladeshs biggest export earner with value of over $ 16 bn of exports in 2009-10.Factories design and produce for the worlds leading brands and retailers. This rapidly growing sector of the Bangladeshi economy offers a unique competitive edge that supports profitable expansion into new strategic markets.

3. Related and Supporting Industries:

Bangladesh textile industry is supported by developed supporting industries and organizations that supply inputs and knowledge to the industry in terms of design, engineering and machinery. Bangladesh has built the sufficient infrastructure in various textile departments like design, production, sourcing and merchandising. Various institutes like Bangladesh University of Textiles, National Institute of Fashion Technology (NIFT) and Dhaka University of Engineering & Technology that are supporting the textile industry.

Supporting industries supply inputs raw materials, which are important to the competitiveness of any industry. Bangladesh is self-sufficient in knit fabric while accessories and trims suppliers are more competitive to support the clothing industry. These industries provide cost-effective inputs and upgrading process, thus stimulating other companies in the chain to innovate.

4. Rivalry, Strategy and Structure:

Rivalry among a group of domestic competitors creates pressures to improve and innovate. Domestic rivals search for alternative methods for gaining competitive advantages. Rivalry among local firms push industries for innovation, but as the clothing industry in the country is not saturated to feed international demand, thus local rivalry is not prominent here. As the country has adopted the strategy of export-led model to develop itself, the firms are also following the export-oriented industry model. Clothing industry players are building joint ventures, partnership, becoming mergers, as required to fight international competition countries.

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Government role
The Government of Bangladesh does not play any direct role in the textile and clothing business. However, the Government helps the industry indirectly by providing some basic policy support such as back-to-back letters of credit, the duty drawback scheme, bonded warehouse facility and cash incentives. Encouraging export-led industrialization is the main objective behind such government initiatives.

Company Taken From the Textile Industry

Taking Bangladesh to the World...

BEXIMCO is well positioned to capitalize on strong growth across industries in both the domestic and global markets. Each Group company is managed by an independent, professional team with significant depth of experience. Management teams have established a clear strategic plan that will further strengthen the overall platform. BEXIMCO intends to leverage its market position and global scale, further diversify operations into highly profitable sectors, capitalize on the domestic growth opportunity and selectively pursue international opportunities going forward. Today the BEXIMCO Group (BEXIMCO or the Group) is the largest private sector group in Bangladesh. BEXIMCO was founded in the 1970s by two brothers Ahmed Sohail Fasiur Rahman and Ahmed Salman FAZLUR Rahman. Since the early days, the Group has evolved from being primarily a commodities trading company to a leading, diversified group with a presence in industry sectors that account for nearly 75% of Bangladeshs GDP. BEXIMCOs corporate mission is Taking Bangladesh to the world. As BEXIMCO has grown over the years, the flagship platform now has operations and investments across a wide range of industries including textiles, trading, marine food, real estate development, hospitality, construction, information and communication technologies, media, ceramics, aviation, pharmaceuticals, financial services and energy. The Group sells its products and services in the domestic Bangladesh market as well as international markets. BEXIMCO is

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the largest employer in the private sector in Bangladesh and employs over 48,000 people worldwide. The BEXIMCO name has now become one of the most recognizable brand names in Bangladesh. It is synonymous with innovation, trust and quality. The Group consists of four publicly traded and seventeen privately held companies. The publicly traded companies Bangladesh Export Import Company Limited, BEXIMCO Pharmaceuticals Limited, Shinepukur Ceramics Limited and BEXIMCO Synthetics Limited have a combined market capitalization of approximately $539.06 million. The Group had total revenues of $834 million in the year ended December 31, 2010.

A company within the BEXIMCO group

BEXTEX Ltd.

"One of South Asias largest vertically integrated textile and garment companies with in-house analytical and creative abilities" BEXTEX Ltd. (the "Company") was incorporated in Bangladesh as a Public Limited Company with limited liability on 8 March 1994 and commenced commercial operation in 1995 and also went into the public issue of shares and debentures in the same year. The shares of the Company are listed in the Dhaka and Chittagong Stock Exchanges of Bangladesh.

BEXTEX Ltd. is the most modern composite mill in the region. BEXTEX Ltd. has an installed capacity of 288 high-speed air-jet looms in its weaving section and a high-tech dyeing and finishing section with a capacity of 100,000 yards of finished fabric per day. This company is located at the BEXIMCO Industrial Park.

BEXTEX Ltd. has a state of the art composite knit fabric production mill, which serves the

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growing needs of high-quality knit garments exporters in Bangladesh. The project was set up as a state of the art knit fabric knitting, dyeing and finishing facility. During the year the Company produced and sold high quality of knit fabrics and bringing forth all the latest in hard and soft technologies in knitting, dyeing and finishing of knit fabric.

BEXTEX Ltd. also has cotton and polyester blended yarn-spinning mill, with 122,000 spindles is one of the largest spinning mills of the country. The mill was set up to feed the country's export oriented industries.

BEXTEX Ltd. produces specialized finishes of denim cloth for export in finished as well as cloth only form.

Our Mission: BEXTEX Ltd. is a full service vendor with strong vertically integrated production facilities as well as creative & analytical capabilities which clearly set us apart from most other South Asian vendors.

Our Vision: Gain market leadership in high value added apparel in USA & Europe. Use Innovation & Speed as prime drivers, rather than cotton & cheap labor. Dominate these markets in high quality :

Men's, Women's , Children Shirts ( Dress & Casual ) Blouses ( formal & casual ) , Skirts, Jackets Jeans & Casual non - denim bottoms Knitted tops & bottoms

Key clients include American Eagle, Arcadia Group, Calvin Klein, H&M, JC Penney, Macy's, Tommy Hilfiger, Warnaco and Zara. The Group is planning to expand the textiles business through capacity additions. Post expansion, the annual capacity of knit fabric is expected to increase to 80 million

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lbs from 11 million lbs currently and the annual capacity of apparel knits is expected to reach 145 million pieces from 20 million pieces currently.

Firm specific advantages

One of the most important firm specific advantages is that BEXTEX Ltd is "One of South

Asias largest vertically integrated textile and garment companies with in-house analytical and creative abilities . BEXTEX ltd is a subsidiary of BEXIMCO group that is
the biggest group in the Bangladesh. Technology- Superior technology and experience allows BEXTEX Textile to better meet the needs of their customers in ways that competitors cant imitate.

Besides, BEXTEX organization has a very good research and development (R&D) department. This department provides much support in order to read consumers preference/mood, developing new and innovative product features and design, and lowering products cost.

Porters Five Forces

1. Rivalry among competing Sellers 2. Threat of New Entrants 3. Threat of substitute products 4. Bargaining power of Supplier

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5. Bargaining power of Buyer 1. Rivalry among competing Sellers As the Bangladesh textile industry is export oriented so rivalry in this industry is very strong. BEXTEX ltd is One of South Asias largest vertically integrated textile and garment companies with in-house analytical and creative abilities. BEXTEX Ltd is competing its competitors by offering high quality products, new designs products, low prices, wide range of products etc. BEXTEX Ltd uses latest technology and new manufacturing techniques.

Weapons for battling rivals

Lower Prices BEXTE X offers its quality products with low prices as compare to its competitors Higher quality The products quality of BEXTEX is high and better to gain competitive edge. Wider selection of products To get competitive advantage BEXTEX offer a wide collections of products. Yarn (Count, Fiber, CVC, TC etc.), Fabric (Poplins, Stripes, Wrinkle Free etc.), Knit (Jersey, polo etc), Denim (Chambray, Denim blue etc) Unique Wrinkle-Free Product (Cortek-2000, Cotra DP 3.5 +)

Stronger capabilities to provide buyers with custom-made products: By providing customized, innovative, well designed products with higher quality, a firm can build long term relationship with its customers, especially foreign customers.

2. Threat of New Entrants The greatest advantage that Bangladesh textile industry has right now is its cheap labor. So newcomers can expect to earn attractive profits. This may attract new companies to enter in the Bangladesh market. But I think even in this situation, BEXTEX organization has the capability to compete the existing as well as new organization possibly coming in the textile sector of Bangladesh. To keep

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pace with the fast changing fashion scenario, we continue to strengthen our design and R&D activities which enabled us to offer the customers differentiated, innovative and value added products. Our spinning became more flexible and diversified with the addition of compactor, Caipo slub attachment and being the only company in Bangladesh to successfully do colored melange yarn. Our space dyed, mercerized knits, flat finish and brushed denim, 100% cotton wrinkle-free fabric as well as fully fused wrinkle-free garments.

Similarly, BEXTEX organization has very rich experience of Bangladeshi consumers market, products line, and sales and distribution channels, which other organization do not have. Besides, BEXTEX developed so many well established brands on the basis of consumers preferences, quality, prestige etc, which already captured major consumers market of Bangladesh. So its quite difficult for competitors to compete with BEXTEX organization in near future.

3. Threat of substitute products In garments industry it is difficult to find and introduce substitute products to consumers. Secondly, since the inception, BEXIMCO Group became the pioneer of head hunting for all of their fields and successfully accumulated the best talents from within the country as well as from abroad and could make an excellent environment to flourish their qualities and capabilities by utilizing their capacities in the process of manufacturing, maintenance and of course in the management in broad. Besides, BEXTEX organization has a very good research and development (R&D) department. This department provides much support in order to read consumers preference/mood, developing new and innovative product features and design, and lowering products cost. Due to these steps BEXTEX organization is in a better position to compete in the market place. 4. Bargaining power of Supplier If there are few suppliers in the market place, and if you do not have good relationship with these few suppliers, then obviously this can effects the bargaining power of Supplier. But, BEXTEX Limited, a unit of BEXIMCO Textiles Division, the country's largest body of managing the vertically integrated production facilities from yarn to garment has a unique combination of

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technical and generalist talents as their resource above all. This strategy reduces the dependence of BEXTEX on its suppliers, as BEXTEX has its own raw material arrangements.

5. Bargaining power of Buyer BEXTEX - as a part of BEXIMCO Textiles Division has taken necessary steps to face the challenges considering the competition after elimination of quotas restriction trade between World Trade ORGANISATION (WTO) members especially from China, India, Taiwan and South Korea. BEXTEX sensed this threat and set its strategy accordingly. , it has positioned itself as a one-stop shop for an Over the year ray of fabric & garment meeting the quality and delivery requirements of the world's most renowned brands and retailers. To day the strength of BEXIMCO textile division lays in its state-of-the-art integrated facility from yarn to apparel, low cost operation due to cheap labor, above all the name BEXIMCO, which evokes a very good image of the products at any world-class brand/retailer. This company has also national given same focus on domestic users besides its inter customers. Moreover, necessary plantation, treatment, control measures etc. are also properly ensured as per the guidelines of the World Bank, Department of Environment and also of other concerned bodies. Abiding by the appropriate policies and procedures of health safety and environment are also ensuring the conformity of the Buyers Code of Conduct and makes all the leading buyers satisfied on their set standard of compliance. The certification of compliance from the buyers like PVH, Perry Ellis, Wal-Mart, JC Penny, Haddad etc. are the recognition of BEXTEX in making the company compliant of global standards.

SWOT Analysis of BEXTEX PVT Limited Strengths

Unique Products- Unique products help distinguish BEXTEX Textile from competitors. BEXTEX Textile can charge higher prices for their products, because consumers cant get those products elsewhere Technology- Superior technology and experience allows BEXTEX Textile to better meet the needs of their customers in ways that competitors cant imitate.

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Brand Name- A strong brand name is a major strength of BEXTEX Textile. This gives BEXTEX Textile the ability to charge higher prices for their products because consumers place additional value in the brand

Weaknesses
Weak Management- Weak management increases business risks and reduces profits for BEXTEX Textile, because they are responsible for the health of the business. Cost Structure- A weak cost structure means BEXTEX Textiles costs are high in comparison to their competitors.

Opportunities
New Services - New services help BEXTEX Textile to better meet their customers needs. These services can expand BEXTEX Textiles business and diversify their customer base. International Expansion- International markets offer BEXTEX Textile new opportunities to expand the business and increase sales.

Threats
Bad Economy- A bad economy can hurt BEXTEX Textiles business by decreasing the number of potential customers. Government Regulations- Changes to government rules and regulations can negatively affect BEXTEX Textile. Substitute Products- The availability of substitute products hurts BEXTEX Textiles ability to raise prices, because customers can easily switch to another product or service

Destination of Company?
India

Location:

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Southern Asia, bordering the Arabian Sea and the Bay of Bengal, between Burma and Pakistan Area: Total: 3,287,263 sq km

Country comparison to the world: 7 Land: Water: 2,973,193 sq km 314,070 sq km

GDP - real growth rate: 6.8% (2011 est.) Country comparison to the world: 35 10.1% (2010 est.) 5.9% (2009 est.)

Labor force: 487.6 million (2011 est.) Country comparison to the world: 2

Labor force - by occupation: Agriculture: Industry: Services: 52% 14% 34% (2009 est.)

Agriculture - products Rice, wheat, oilseed, cotton, jute, tea, sugarcane, lentils, onions, potatoes; dairy products, sheep, goats, poultry; fish Industries: Textiles, chemicals, food processing, steel, transportation equipment, cement, mining, petroleum, machinery, software, pharmaceuticals Exports - commodities: Petroleum products, precious stones, machinery, iron and steel, chemicals, vehicles, apparel Imports - commodities: Crude oil, precious stones, machinery, fertilizer, iron and steel, chemicals

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Overview of textile industry The textile industry in India is one of the flourishing sectors of Indian economy. It contributes more than 13% to industrial output, 16.63% to export revenues and 4% to the nations GDP. In the year 2010, the industry is estimated to produce 12 million jobs with an investment of US$ 6 billion in the fields of textiles equipments and structure, and garment manufacturing by the end of 2015.

Why India
Current Status and Size of the Market Textiles & Garments constitutes about 5% of the GDP in India and the current value of the industry is $36 billion Indias share of the world trade in textiles is currently only 3.5% compared to China's 20% share Indian textile exports grew by 14% in 2004-05 over 2003-04; growth of over 20% in CY 2005 India is amongst the largest producers of: Cotton (medium staple) 16.75 million bales p.a. Yarn - 4,170 million kgs. p.a.; about 25% share of world trade in cotton yarn Fabrics - 4,283 million sq.mts. p.a. About 35 million people in India are directly employed in textiles & garments sector and it is the second Largest employer after agriculture.

Structure of Indian Textiles & Garments Industry The Indian textile industry is dominated by only a few large (organized) and numerous small and medium (unorganized) companies. Most of the small and medium companies don't have global presence but are costcompetitive for the advantages of ready availability of raw material and low-cost manpower. Cotton and synthetic fiber is available in large quantities.

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Many international brands, such as GAP, Wal-Mart, Tommy Hilfiger, Benetton, G Star, Levis and Marks & Spencer, are using India as a sourcing hub. India's cost advantages of manufacturing textiles and garments derive from: Abundant supply of inputs at competitive prices Low cost labor with a range of skill levels from unskilled labor to fashion design Special Economic Zones will build on these advantages by: Absence of domestic taxes or import duties 5 year income tax holiday followed by income taxes at 50% of the normal rate for as long as 10 years Reduced transaction costs Better infrastructure 25 integrated textile parks, planed by the Ministry of Textiles, are coming up soon There are over $30 billion worth investment opportunities for capacity expansion and modernization Recently, Carrera Jeans has announced its Jeans manufacturing plant in India with an investment of over $110 million Potential & Opportunities The domestic and the export market are expected to grow at a very high rate. Forecasts say the industry is expected to reach $83 billion in the coming five years. The domestic market growth is driven by a larger consuming class and increasing per capita consumption (currently only 3 kgs. of fiber per capita: 1/3rd of world average). India is hoping to become the second largest exporter of apparel among LCCs by 2010, next only to China. After the removal of international quota, India convert its cost advantages into a larger share of the global market. Opportunity to also exploit Indias large and growing consumer market with increasing spending power.

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BEXTEX shop will be a division of BEXTEX Textiles PVT Limited who produces and manufactures textiles and garments from their own in-house cotton growing facilities to the creation of ready made garments.

Indian textile industry Close to 14% of the industrial output and 30% of the export market share is contributed directly by the Indian textile industry. Indian textile industry is also the largest industry when it comes to employment that generates jobs not just within but also in various support industries like agriculture. As per a recent survey the textile industry is going to contribute 12 million new jobs in India by 2010 itself. Indian textile industry is as old as the word textile itself. This industry holds a significant position in India by providing the most basic need of Indians. Starting from the procurement of raw materials to the final production stage of the actual textile, the Indian textile industry works on an independent basis.

Indian textile industry concludes of various segments like: 1. Woolen Textile 2. Cotton Textiles 3. Silk Textiles 4. Readymade Garments 5. Jute and Coir 6. Hand-Crafted Textile like Carpets 7. Man Made Textiles 8. High availability of raw materials 9. Highly skilled economical labor, an added advantage 10. Largest producer of cotton yarn contributing 25% towards worlds cotton 11. Availability of all kinds of fibers like silk, cotton, wool and even high quality synthetic fibers 12. Flexibility of the readymade garment industry in terms of sizes, fabric variety, quantity, quality and cost

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Most of the international brands like Marks & Spencer, JC penny, Gap have started procuring most of their fabrics from India.

SWOT analysis of Indian textile industry Strengths:

Indian Textile Industry is an Independent & Self-Reliant industry. Abundant Raw Material availability that helps industry to control costs and reduces the leadtime across the operation. Availability of Low Cost and Skilled Manpower provides competitive advantage to industry. Availability of large varieties of cotton fiber and has a fast growing synthetic fiber industry. India has great advantage in Spinning Sector and has a presence in all process of operation and value chain. India is one of the largest exporters of Yarn in international market and contributes around 25% share of the global trade in Cotton Yarn. The Apparel Industry is one of largest foreign revenue contributor and holds 12% of the countrys total export. Industry has large and diversified segments that provide wide variety of products. Growing Economy and Potential Domestic and International Market. Industry has Manufacturing Flexibility that helps to increase the productivity.

Weaknesses:
Indian Textile Industry is highly Fragmented Industry. Industry is highly dependent on Cotton. Lower Productivity in various segments. There is Declining in Mill Segment. Lack of Technological Development that affect the productivity and other activities in whole value chain. Infrastructural Bottlenecks and Efficiency such as, Transaction Time at Ports and transportation Time. Unfavorable labor Laws. Lack of Trade Membership, which restrict to tap other potential market. Lacking to generate Economies of Scale.

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Higher Indirect Taxes, Power and Interest Rates.

Opportunities:
Growth rate of Domestic Textile Industry is 6-8% per annum. Large, Potential Domestic and International Market. Product development and Diversification to cater global needs. Elimination of Quota Restriction leads to greater Market Development. Market is gradually shifting towards Branded Readymade Garment. Increased Disposable Income and Purchasing Power of Indian Customer open New Market Development. Emerging Retail Industry and Malls provide huge opportunities for the Apparel, Handicraft and other segments of the industry. Greater Investment and FDI opportunities are available.

Threats:
Competition from other developing countries, especially China. Continuous Quality Improvement is need of the hour as there are different demand patterns all over the world. Elimination of Quota system will lead to fluctuations in Export Demand. Threat for Traditional Market for Power loom and Handloom Products and forcing them for product diversification. Geographical Disadvantages. International labor and Environmental Laws. To balance the demand and supply. To make balance between price and quality.

Mode of entry
FDI is our mode of entry in India Direct Investments (FDI) up to 100% is allowed in this sector through the automatic route by the Reserve Bank of India In order to provide quality cotton raw materials at reasonable price to the manufacturers, the Technology Mission on Cotton was launched

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In order to facilitate the technological advancement in the textile industry, the Technology Up gradation Fund Scheme (TUFS) was set up. The Scheme for Integrated Textile Park (SITP) is set up to provide world standard infrastructure facilities The reservations for the small scaled units in textiles were abolished