term paper on garments industry in bangladesh

What’s next for Bangladesh’s garment industry, after a decade of growth?

As Bangladesh celebrates 50 years of independence, global attention is focused on the remarkable economic and social progress the country has achieved in recent decades. Even with the setbacks of the COVID-19 pandemic, the South Asian nation is on track to become a middle-income country within the next few years. 1 Tazreena Sajjad, “Bangladesh at 50: A nation created in violence and still bearing scars of a troubled birth,” The Conversation , March 12, 2021.

The ready-made garment (RMG) industry is a mainstay of this economic success story: Bangladesh is today one of the world’s largest garment exporters, with the RMG sector accounting for 84 percent of Bangladesh’s exports. This comes on the back of the sector’s rapid growth and modernization over the past decade—as well as the strides it has made in improving conditions for the country’s approximately four million garment workers.

However, the pandemic has stalled the sector’s progress at a crucial moment, just as global shifts in fashion sourcing threaten Bangladesh’s position in industry supply chains.

Ten years ago, in 2011, we published our report, Bangladesh’s Ready-made Garments Landscape: The Challenge of Growth , for which we had collaborated with the Bangladesh German Chamber of Commerce and Industry. With this article we want to take stock of Bangladesh’s RMG sector—examining its growth to date, highlighting the big challenges it has navigated since then, and suggesting the transformative steps that are needed if the sector is to maintain and renew its economic vibrancy in the decade ahead. To support this stocktaking we have conducted a series of interviews with sourcing executives of leading global fashion brands and retailers.

From tragedy to transformation: Looking back at a decade of growth

The transformation of Bangladesh’s RMG sector over the past decade was catalyzed, in part, by a series of workplace tragedies that took the lives of more than 1,000 garment workers and made headlines around the world. The 2012 Tazreen factory fire and the 2013 Rana Plaza factory collapse highlighted massive problems in working conditions, led some international buyers to stop sourcing from Bangladesh, and prompted the United States to withdraw its preferential tariff agreement.

Today, Bangladesh’s RMG sector is a frontrunner in transparency regarding factory safety and value-chain responsibility, thanks to initiatives launched in the aftermath of the disasters—including the Accord on Fire and Building Safety in Bangladesh, the Alliance for Bangladesh Worker Safety, and the RMG Sustainability Council. These measures led to the closure of hundreds of unsafe, bottom-tier factories and the scaling-up of remediation activities in many others.

These steps helped restore Bangladesh’s attractiveness in the global apparel-sourcing market, leading to a decade of rapid growth. Ten years ago we forecasted a growth of 7 to 9 percent. Indeed RMG exports from Bangladesh more than doubled, from $14.6 billion in 2011 to $33.1 billion in 2019—a compound annual growth rate of 7 percent. 2 Export Performance /Bangladesh Garment Manufacturers and Exporters Association (BGMEA) compiled data by Export Promotion Bureau. (It is worth noting that this growth was within the range we forecast in our 2011 report, a collaboration with the Bangladesh German Chamber of Commerce and Industry.) Over this period, Bangladesh’s RMG industry increased its share of global garment exports from 4.7 to 6.7 percent. 3 WTO Trade and tariff data. This is within the range we forecasted in our report, however it also shows that the country has not captured the full potential we had foreseen ten years ago.

There were signs of a slowdown, with the second half of 2019 showing negative growth compared to 2018. Then COVID-19 struck: in 2020, global lockdowns triggered order reductions, cancellations, payment delays, and renegotiation of terms. As the pandemic threatened the lives and livelihoods of Bangladeshi workers, many smaller, less well-funded factories closed their doors, and competition for smaller orders increased. The value of Bangladesh’s RMG exports fell by 17 percent in the first year of the pandemic, representing revenue losses of up to $5.6 billion. 4 Export Performance /Bangladesh Garment Manufacturers and Exporters Association (BGMEA) compiled data by Export Promotion Bureau.

Our regular surveys of chief procurement officers (CPOs) in the fashion industry indicate that Bangladesh’s attractiveness as an apparel-sourcing destination remains potent—yet the country has faced increasing competition in recent years, which could compound the challenges of the pandemic. Although our 2019 CPO survey pointed to Bangladesh as the top global sourcing hotspot , Vietnam was close behind, and was the preferred sourcing country among US executives. Although comparable data for global exports in 2020 has not yet been published by the World Trade Organization, data from European and US imports indicate that Vietnam likely overtook Bangladesh in 2020—pushing Bangladesh’s RMG industry out of its position as the second-largest garment-exporting country in the world after China. 5 USITC; Eurostat.

While Bangladesh’s RMG sector remains a strong exporter to Europe’s fashion industry, and has grown its market share significantly over the past decade, this trend may not continue: the new preferential trade agreement between the European Union (EU) and Vietnam, launched in August 2020, could well lead to apparel exports from Vietnam outperforming Bangladesh’s. Among US apparel importers, Vietnam has outpaced Bangladesh’s RMG industry for some time; in 2020, Vietnamese apparel imports into the US were worth 2.5 times those from Bangladesh. As buyers from the US move sourcing out of China, Vietnam is proving to be the biggest winner (Exhibit 1). 6 USITC.

Tackling the big challenges

Over the past decade, Bangladesh’s RMG sector has made impressive progress in tackling the challenges of growth—particularly in diversifying customers and products, improving supplier and workforce performance, and strengthening compliance and sustainability. 7 We outlined these challenges in our 2011 report, Bangladesh’s ready-made garments landscape: The challenge of growth. It is worth taking a closer look at the progress made in each of these areas, and considering what is required to build on it, while navigating the new challenges of the pandemic and the shifting global apparel-sourcing market.

A key strategy for the sector’s growth over the past decade has been to diversify customer countries and move to more complex products and value-added services . Bangladesh’s RMG sector has made progress in broadening its customer portfolio to manage risk and adapt to changing demand patterns in the global fashion market. However, Europe (62 percent of export value) and the US (18 percent of export value) remain Bangladesh’s RMG industry’s leading customer markets, although dependency on the US has decreased. There is room to increase exports to nontraditional markets, particularly as traditional markets are showing lower growth in apparel retail sales.

Several sourcing executives we spoke to for this article highlighted the progress that Bangladesh’s RMG sector is making in diversifying and upgrading its product offerings. For instance, there is now greater capacity to produce garments made from synthetic fibers; manufacture more complex products such as outerwear, tailored items, and lingerie; and provide new washes, prints, and laser finishings. Entry into these new segments has been supported by the changing rules of origin for preferential trade with the EU, allowing for the use of imported fabrics. There also has been some increase in vertical integration of the supply chain, with the result that more suppliers are now able to offer lead times below the standard 90 days.

However, many of Bangladesh’s factories have not yet transitioned to providing these new offerings, and have shied away from the investment required to do so. The numbers show that T-shirts, trousers, and sweaters continue to dominate the country’s exports. In fact, Bangladesh’s top ten products accounted for more than 55 percent of the country’s export value of apparel to the EU in 2019 8 Eurostat. ; the iconic cotton T-shirt accounts for around one-fifth of the value of Bangladeshi garment exports to Europe. Consequently, Bangladesh’s garment industry is facing palpable price pressure in basic product categories (Exhibit 2).

The country’s RMG sector is by no means homogenous, however. Bangladesh’s advanced manufacturers are characterized by a high degree of entrepreneurship and strategic management; these firms have made investments in productivity improvement, digitization, automation, and sustainability, and they operate according to international best practices. In contrast, the small operators that make up the majority of the market typically focus on CMT; they tend to lack financial security and lag in management capability, and have also been hit hardest by the pandemic.

Encouragingly, sourcing executives of leading global apparel brands and retailers have partnered with their Bangladeshi suppliers, helping them to improve efficiency and sustainability.

A second major challenge facing the sector has been worker empowerment and the gender gap . Digitization of wage payment has increased, and there have been marked improvements in employment rights. Though the gender gap remains an issue, when it comes to opportunities for career progression from entry level. There is greater focus on gender diversity, as well as opportunities for upskilling and career progression today. However, progress has been slow, and COVID-19 has highlighted, and perhaps exacerbated, the precarious position of many Bangladeshi apparel workers.

Turning to compliance, factory and occupational safety, and transparency , the Bangladesh garment sector has shown enormous improvement. Factory buildings not only have become safer, Bangladesh now has more green garment factories than any other country, although these factories’ share of the country’s apparel exports remains low.

The sector’s participation in new initiatives regarding climate change and circularity have advanced the sustainability agenda, for example through the Circular Fashion Partnership, a multi-stakeholder initiative aiming to scale up recycling of production waste. Furthermore, more than 1,500 Bangladeshi companies are certified by the Global Organic Textile Standard, the second highest number in any country in the world.

Finally, infrastructure remains one of the biggest issues facing the RMG sector. For its apparel industry to prosper in the future, Bangladesh will need to strengthen transport, energy, and digitization infrastructure.

In the World Bank’s Logistics Performance Index, Bangladesh dropped from 79 in 2010 to 100 in 2018 in the overall ranking. By comparison, Vietnam improved its ranking from 53 to 39 over the same period. Several major infrastructure projects that are under development could significantly improve Bangladesh’s position. These include the Padma bridge, scheduled to open in 2021; and Bangladesh’s first deep-sea port, the Matabari development, which is expected to be functional by 2025, complete with a new container terminal.

Looking ahead: Transforming in a time of change

Bangladesh’s garment sector has every prospect of remaining one of the world’s largest RMG manufacturers, and continuing its impressive story of growth and improvement. However, the country’s apparel industry is facing headwinds, and will need to take decisive action in several areas if it is to prosper. It will need to rise to the challenges of competing without preferential trade access; meeting decreased demand from traditional customer markets; and making a fundamental shift  toward a demand-driven and more sustainable sourcing model.

Some of the international buyers we spoke to believe the industry is not moving fast enough in this direction. Others are more positive: they feel that, given the resilience and adaptability Bangladesh’s manufacturers have shown in the past, the RMG industry will be able to navigate the necessary transformation, though structural changes will be inevitable.

As Bangladesh graduates from least-developed to middle-income country status in the next few years, preferential access to European and other markets is up for negotiation. Additional tariffs would be seriously disruptive for the RMG sector, but levelling the playing field with competing markets could also trigger a much-needed focus on productivity, as well as investment in digitization, automation, and sustainability.

Some global executives are reducing sourcing from Bangladesh, as their sourcing volume reaches a tipping point in their dependency and supply-chain risk on the country (which is further heightened by the pandemic), and owing to loss of competitiveness in some product categories. There is also an increased focus on nearshoring for greater flexibility and speed. That said, Bangladesh’s larger and more advanced suppliers may benefit from advances in flexibility, productivity, digitization, environmental sustainability, worker welfare, and innovation. One sourcing executive told us: “Speed is becoming more important, but only a minority of suppliers in Bangladesh understand that.” If they are to remain competitive, many suppliers will need to invest in upskilling, vertical integration, digitization, and automation to unlock speed and transparency.

Sustainability, too, is becoming ever more important, with increasing consumer demand for environmentally friendly products, and concerns about climate change and social justice . In 2020, Bangladesh ranked only 87 out of 115 countries in the World Economic Forum’s Energy Transition Index; transforming the Bangladesh RMG sector into a climate-neutral industry  will be a major challenge, requiring enormous investment into renewable energy and the grid.

There will also be regulatory changes to contend with, especially in the EU. Suppliers will need to ramp up R&D and innovation: to drive product upgrading and diversification in areas such as technical materials and functional innovation; and to pursue sustainability by focusing on circularity, innovative fibers, and operational improvements.

In our past sourcing surveys, consolidation towards more advanced suppliers to deliver on flexibility and sustainability gained traction.

Consolidation of Bangladesh-owned factories has been accelerated by COVID-19 (Exhibit 3), which has heightened the polarization of progressive suppliers and small enterprises—impacting the capacity of the whole industry to transform.

Some sourcing executives mentioned a shift of sourcing volumes towards foreign-owned factories in Bangladesh, especially for more complex or technical products and synthetics. They are also looking for suppliers who continuously invest in sustainability, worker welfare, and transparency.

Bangladesh’s government might benefit from recalibrating its strategies to attract foreign investors. An FDI, often from a multi-country corporations, brings global management and operational best practices, as well as R&D capability and funding. But Bangladesh’s RMG sector currently lags in FDI compared to its Asian peers. In Vietnam, for example, FDI-backed companies—from South Korea, Taiwan, Hong Kong, China, and elsewhere—account for around 70 percent of apparel exports. 9 Vietnam Textile and Apparel Association (VITAS).

Bangladesh’s RMG sector has achieved impressive growth and transformation over the past decade, overcoming significant obstacles along the way. Today, however, it faces a new set of challenges, amid a global pandemic and a shifting global apparel-sourcing market. In the years ahead, the industry will need to embrace a more holistic transformation, in partnership with manufacturers, international buyers, worker representatives, the government, and other stakeholders.

As international buyers navigate the rapidly changing environment, they are tasked to work with more advanced suppliers to develop demand-driven, more sustainable supply chains. To do so, they will need to build deeper, truly strategic partnerships , while pushing to overcome the past decades’ deflationary dynamics in global apparel retail markets.

Achim Berg and Karl-Hendrik Magnus are senior partners in McKinsey’s Frankfurt office,  Harsh Chhaparia is a partner in the Gurugram office, and Saskia Hedrich is a senior expert in the Munich office.

The authors wish to thank the sourcing executives who generously contributed their time and perspectives for this article.

Explore a career with us

Related articles.

Fashion’s new must-have: Sustainable sourcing at scale

Time for change: How to use the crisis to make fashion sourcing more agile and sustainable

The State of Fashion 2024: Finding pockets of growth as uncertainty reigns

Academia.edu no longer supports Internet Explorer.

To browse Academia.edu and the wider internet faster and more securely, please take a few seconds to  upgrade your browser .

Enter the email address you signed up with and we'll email you a reset link.

• We're Hiring!
• Help Center

Report on Problems and Prospects of Garments Sector in Bangladesh --An overview in the context of recent global Recession EAST WEST UNPIERSITY COURSE:BUS-498 Head of Career Counseling Center Prepared By

Related Papers

zahurul Alam

The ready-made garment industry (popularly known as RMG), counts for almost 81% of the total exports of Bangladesh. This sector was the first to provide largescale employment opportunities to women in a country where they traditionally have not worked outside the home. However, the challenges are many, varied and possibly insurmountable, raising the question of the sustainability of its present growth and its future growth as well. The purposes of this paper have, therefore, been to identify the present problems, the strategies to overcome these problems and finding the answers to the question(s) raised in the study. This study followed a qualitative research approach. Data were collected from secondary sources like project contracts and records, media reports and publications, documents and articles from relevant agencies. The findings indicated that to the extent that the cultivation of a spirit of openness, transparency and democratic governance were installed and political strif...

The ready-made garments (RMG) sector has a greater potential than any other sector in terms of employment and foreign exchange earnings to reduce poverty and make a contribution to the national economy. Along with its potentiality the sector is also experiencing new challenges which can be the future determinants of its sustainability. The present study has made on descriptive research, is conducted to identify different dimension of challenges in readymade garment industry in Bangladesh and a feasible solution to cope up the challenges. To accomplish result research technique has relied based on information from secondary sources. From the inception of RMG in 1978 Bangladesh has seen a tremendous growth of the number of factories in consistent with the amount of export. In year 1983-84 there were only 134 RMG units where only 40000 workers were working in this sector but in 2013-2014 the number of RMG units increases around 6000 with the employment of around 4.2 million workers among them almost 80% are female. This sector also faces a lot of challenges like unskilled workers, improper infrastructure, electricity crisis, gas shortage, insufficient bank loan associated with high rate of interest, high tax rate, intricate social compliance, political crisis, market and product diversification, lack of new investment, poor backward and forward linkage etc. In order to overcome these challenges, we need to take number collaborative and coordinated steps to be taken from both owners and major stakeholders to reach the ultimate goal of achieving the top position in the world apparel market.

K.M. Faridul Hasan , Ashaduzzaman Himel , Md Shipan Mia

Bangladesh has emerged as a key player in RMG (Ready Made garment) sector since 1978. Textiles & Clothing account for about 85% of total export earnings of Bangladesh. Out of which 76% comes from the apparel sector which covers the major products of knit & woven shirts, blouses, trousers, skirts, shorts, sweaters, sportswear's & many more casual & fashion items. The sector currently employs approximately 1.5 million workers, mostly females from underprivileged social classes. The pivotal factor in apparel industry is the workforce i.e. the operators, helpers, cutting masters, finishers etc. Bangladesh is endowed with abundant & cheap workforce that is easily trainable & convertible into semiskilled & skilled workforce. Existence of such category is one of the advantages that Bangladesh will be enjoying over a considerable period in the context of international trade on clothing. To cope up with global challenge we must adopt with factors of technological advancement with proper working environment in textile & apparel sector of the country. In my report i tried to illustrate about the prospect & future of RMG sector in Bangladesh.

International Journal of Research in Business and Social Science (2147- 4478)

Fahim S Chowdhury

The ready-made garments (RMG) sector of Bangladesh has developed immensely under the broad radar of the export market, and its size is beyond imagination. Unfortunately, there has been no study that explores the whole universe of the RMG sector of Bangladesh rather the story of the RMG sector often involves the export market only. The discussion of this paper intends to explore the methodology of unboxing the whole universe of the RMG sector of Bangladesh that includes small and medium-sized manufacturing and processing units that are often involved with subcontracting for other factories (producing for the export market as well as domestic market), are suppliers of the domestic market, are producers of accessories, and are providing backward linkages and associated services. The discussion addresses that along with export-oriented RMG factories there exists an unexplored and unboxed universe of manufacturing and processing units associated with the RMG sector of Bangladesh that con...

Shuyab Alam

The readymade garment industry in Bangladesh has been growing almost uninterruptedly since the late 1970s. At the end of 2004, the sector survived the Multi-Fiber Arrangement (MFA) phase out as it triumphed over the relative emerging economies and continues to remain internationally competitive till date. The dynamic development of the industry has entailed great diversity in efficiency in comparison with the garment industries of other developing countries. Although there is a significant scale effect in profitability and productivity, no supporting evidence was found for the positive impact on competitiveness of industrial upgrading in terms of usage of expensive machinery, vertical integration, and industrial agglomeration. However, the painfully crippling state of working conditions for the labour, the safety hazards that they are forced to work in, and bleak future prospects ahead of them are just some of the concerns of the Bangladesh RMG sector. Amongst the garment workers 70 per cent are women, they toil from dawn to dusk even up to late night in spite of the wage discriminations and below satisfactory working levels. Affording daily items such as foods, cloths, housing, medicines, and even education of their wards necessitates umpteen of sacrifices. As a result, their children are deprived from their care and suffer from grave malnutrition coupled with unhygienic complexities. They simply have no time or scope for recreation and are even at times employed in making the garments themselves. Market force, represented by low wage of labor, the lackadaisical government attitudes, the negligence of legislative and the executive arms of the state and the dynamism inside the industry are just some of the factors responsible for their exploitation. The roles of the government, industrial associations and technology transfer are also known to affect the workers negatively. The research is aimed at exploration of the major causes that have resulted in the widespread deprivation of the workers in the Bangladesh RMG sector.

The development of Garments Industry is considered as the priority area in the development policy in many countries, especially in Bangladesh. The young entrepreneurs are engaged in varied form of small and medium scale garments industry which comprises of products like shorts, trousers, shirts, sweaters, blouses, skirts, tea-shirts, jackets, sports attire and many more casual and fashion items with the changing times. This study is conducted to analyze the prospects, problems and solution of problems of Readymade Garments Industry in Bangladesh. The findings of this paper show that Bangladesh has a great opportunity to earn a great foreign currency through developing readymade garments industry. The study also suggests some measure for the removal of ongoing crisis of garment sectors. Literature review: Several authors have analyzed aspects of the garment industry in Bangladesh. Of the various aspects of the industry, the problems and the working conditions of workers have received the greatest attention. There are several studies including the Bangladesh Institute of Development Studies (BIDS) study by Chowdhury S, and Mazumdar P. (1991) and the Bangladesh Unnayan Parisad (1990) study on this topic. Both of these studies use accepted survey and research methodology to analyze a wealth of data on the social and economic background, problems and prospects of female workers in the RMG sector. Ahmad M. looks at the industrial organization of the sector and discusses robustness and long-term viability of apparel manufacturing in Bangladesh. Wiigton (2000) provides a good overview of this industry, especially the developments in the early years. One of the few studies on the Bangladesh apparel industry to be published in a reputed journal in the U.S. is that of Yung Whee Rhee (2003) who presents what he calls a " catalyst model " of development. The Bangladesh Planning Commission under the Trade and Industrial Policy (TIP) project also commissioned several studies on the industry. Hossain and Brar (2004) consider some labor-related issues in the garment industry. Quddus (2006) presents a profile of the apparel sector in Bangladesh and discusses some other aspects of the industry. Islam and Quddus (2006) present an overall analysis of the industry to evaluate its potential as a catalyst for the development of the rest of the Bangladesh economy. Paul-majumder (2007) found that demand for weekly holiday is a major reason for worker's unrest during 2006. It is observed that the workers are engaged in work for all most all days. Abdin M. J. (2008) in his journal " Overall Problems and Prospects of Bangladeshi Ready-Made Garments Industries " focused on labor unrest is RMG sector and provide some solution regarding this problem. Sultana S. and et al (2011) presents results from a survey of " Likely Impacts of Quota Policy on RMG Export from Bangladesh: Prediction and the Reality " which indicates that despite the concern and fear of negative impact on in the aftermath of quota removal of RMG sector in Bangladesh appears with positive trends along with the substantial increasing rate of export amount, the number of jobs and industries and GDP's growth. In 2010, the sector keeps around 20 percent GDP growth of the country. In another study, Ferdous R. (2012) found that the reason behind the labor unrest is the absence of legal and institutional arrangements to ensure labor rights in the RMG sector. Many of the garments factories in Bangladesh are alleged not to comply with the Labor Law and ILO conventions. The main reason for labor unrest is inadequate wages of the workers. Islam M. S, and Ahmad (2010) identified that conveyance, lunch bill and enhancement of casual leave, increase of monthly minimum wages from tk. 1662 to tk. 5000; low house rent and better supply of water and gas are the reasons for the labor unrest in the ready-made garment industry of Bangladesh. In another study, Mirdha R. U. (2012) found that the rumor, fear of job loss, jhoot business, case with police stations, fear of shutdown of factories, arrears, checking at entry point and identity cards, pay hike and discrimination in grades, bad relation

Md.Mazedul Islam

The importance of the textile industry in the economy of Bangladesh is very high. The garments manufacturing sector earned $19 billion in the year to June 2012, one of the impoverished nation's biggest industries. Currently this industry is facing great challenges in its growth rate. The major reasons for these challenges can be the global recession, unfavorable trade policies, internal security concerns, the high cost of production due to increase in the energy costs, different safety issues specially fire, etc. Depreciation of Bangladeshi Taka that significantly raised the cost of imported inputs, rise in inflation rate, and high cost of financing has also effected seriously the growth in the textile industry. As a result neither the buyers are able to visit frequently Bangladesh nor are the exporters able to travel abroad for effectively marketing their products. With an in-depth investigation it was found that the Bangladesh textile industry can be brought on top winning tra...

Abeer Abdullah Gholam Haruni

After recent mishaps in readymade garments industry in Bangladesh, Bangladesh Garment Manufacturer and Exporters Association (BGMEA) have decided to take a step to overcome the difficulties faced by the industry and also find out the possible ways to increase productivity, efficiency and empowerment of workers through sustainable development within the industry. This report is a follow up on seminars conducted in BATEXPO 2013 organized by BGMEA, where industry experts, politicians and business leaders have shared their outlooks and suggestions for the RMG sector in coming years.

Md. Tahidur Rahman

The Economics and Finance Letters

Jannatul Ferdaus

RELATED PAPERS

Revista do Colégio Brasileiro de Cirurgiões

Aja Barbosa

International Education Studies

Ammar Alwan

European Heart Journal

Arthritis & Rheumatism

meera ramanujam

ALBERT MARTINEZ

Asirotul ma'rifah

Reuven Shavit

Advanced Synthesis & Catalysis

Carlos Valdes

N. Studnicka

Jurnal Agro Ekonomi

Idqan Fahmi

Maria Svensson

amasandisusilo Susilo

Frontiers in Immunology

Nidia Carneiro

Professional Development in Education

Holly HansenThomas

Terahertz for Military and Security Applications IV

Mashiur Rahman

Dicky Darmawan

JST (Jurnal Sains dan Teknologi)

Yosef Manik

American Journal of Veterinary Research

Fern Tablin

International Journal of Environmental Research and Public Health

Simon M A W U L O R M Agyemang

Virginia Leo de Almeida Pereira

Clinical Medicine

Jacqueline Filshie

Mônica Valério Barreto

Hacer Yilmaz Türkoğlu

Thélème. Revista Complutense de Estudios Franceses

Armel Ngamaleu

See More Documents Like This

•   We're Hiring!
•   Help Center
• Find new research papers in:
• Health Sciences
• Earth Sciences
• Cognitive Science
• Mathematics
• Computer Science
• Academia ©2024

An official website of the United States government

The .gov means it’s official. Federal government websites often end in .gov or .mil. Before sharing sensitive information, make sure you’re on a federal government site.

The site is secure. The https:// ensures that you are connecting to the official website and that any information you provide is encrypted and transmitted securely.

• Publications
• Account settings

Preview improvements coming to the PMC website in October 2024. Learn More or Try it out now .

• Advanced Search
• Journal List
• Springer Nature - PMC COVID-19 Collection

Bangladesh's Emergence as a Ready-Made Garment Export Leader: An Examination of the Competitive Advantages of the Garment Industry

Ishtehar sharif swazan.

Fashion Dress and Merchandising, West Virginia University, 704 G Allen Hall, 355 Oakland Street, PO BOX 6124, Morgantown, WV 26506-6124 USA

Debanjan Das

Associated data.

The data supporting the findings of this study are available on request.

Bangladesh is the second-largest ready-made garment (RMG) manufacturer and exporter in the world. The RMG industry of Bangladesh has become one of the fastest-growing industries globally since the 1990s and is the main source of its foreign earnings for the last three decades. To gain an in-depth understanding of the Bangladeshi RMG industry’s competitive advantages, a semi-structured qualitative interview approach was employed with 14 executives currently working in the Bangladeshi RMG industry. Porter’s (1990) diamond model of national competitive advantage was adopted as the study’s conceptual framework. Interpretation of the study data revealed four key competitive advantages for the Bangladeshi RMG industry: (a) price, (b) on-time delivery, (c) quality, and (d) product advantages. This study explores the RMG industry of Bangladesh and identifies the competitive advantages from the executive’s perspective, thereby adding value and originality to the academic literature.

Introduction

In the last 25 years, the ready-made garments (RMG) industry has been the most significant source of foreign earnings for Bangladesh (Das et al., 2018 ; Rahman, 2021 ; Zaman, 2021 ). More than 84% of the total export earnings in 2019–2020 came from garment exports which are both a comforting and alarming issue (BGMEA, 2021a , 2021b ; Islam, 2021 ). Comforting because it shows that the export growth of the RMG industry is stable and alarming because of the country's dependency on one source of foreign income. Attaining competitive advantages in garment exports would provide stability to the RMG industry of Bangladesh and help it become more successful.

Continued growth in the apparel industry has helped Bangladesh to maintain steady economic growth (Ahlquist & Mosley, 2021 ; Zaman, 2021 ). The salary structure of the Bangladeshi apparel industry is the major reason the country is considered a global apparel sourcing hub as the current monthly minimum wage is USD 97 (Chandra & Ferdaus, 2020 ; Paul, 2018 ). Meanwhile, the minimum monthly wage in China ranges from USD 162 to USD 358 (Koty & Zhou, 2019 ). This lower wage attracts foreign buyers to source from Bangladesh, leading to an apparel export value of USD 33.07 billion in 2019 (BGMEA, 2021a , 2021b ). Europe and the United States of America (USA) are the major exporting destinations comprising 80% of the country's total apparel exports in 2019. Bangladesh's apparel exports to the European Union (EU) in 2019 were USD 20.42 billion and to the USA was USD 6.02 billion (BGMEA, 2021a , 2021b ). The country also exports apparel products to Canada, Japan, Australia, China, India, Brazil, Chile, Mexico, Russia, and Turkey (Menzel & Woodruff, 2021 ).

Today, Bangladesh holds the second position in garment exporting while China remains the first for the last few decades (Nadiruzzaman et al., 2021 ; Zaman, 2021 ). Bangladesh is also seen as the next sourcing destination to replace China due to its large labor force, low wages, and modern manufacturing facilities (Islam, 2021 ; Menzel & Woodruff, 2021 ; Rahman, 2021 ). However, researchers (Ahlquist & Mosley, 2021 ; Ahmed, 2009 ; Bair et al., 2020 ; Das et al., 2018 ; Mottaleb & Sonobe, 2011 ) found low productivity, poor infrastructure, low research & development, non-availability of spinning facilities, and diseconomies of scale as drawbacks that led to poor performance of the Bangladeshi RMG industry. For example, the country witnessed a 1.2% negative growth rate in the global garment export share in 2019, while India and Pakistan enjoyed a positive growth rate of 2.2% and 4.74%, respectively, during the same period (Islam, 2021 ; Rahman, 2021 ; Zaman, 2021 ). Neighboring competitive countries seem to be taking advantage of the global market share more effectively than Bangladesh.

Although many studies have looked into Bangladesh's competitive advantage in the RMG industry, little research has examined its garment exporter's internal strategies or resources that could be used to compete more effectively in the global marketplace. Previous studies (Yunus & Yamagata, 2012 ; Kathuria, 2013 ; Alam et al., 2017 ; Mostafa & Klepper, 2018 ; Hossian et al. 2019 ; Rasel et al. 2020 ; Hasan et al., 2020 ; Islam, 2021 ; Zaman, 2021 ; Bari & Jin, 2021 ) found a vast labor force, low wages, suitable locations, and export-friendly policies as the competitive advantages of Bangladesh’s RMG industry. These studies (Yunus & Yamagata, 2012 ; Alam et al., 2017 ; Mostafa & Klepper, 2018 ; Chandra & Ferdaus, 2020 ; Islam, 2021 ; Bhuyan & Oh, 2021 ) were focused primarily on the post-Multi-Fiber Arrangement (MFA) quota period (2005–2015) and used secondary data to identify the competitive advantages. However, no recent study has been conducted to determine the present competitive advantages of the Bangladeshi ready-made garments industry from the executive’s perspective who are the life of this industry.

To address the shortage of research on the present competitive advantage situation, the current study has two main objectives: (1) to identify resources that are helping the Bangladeshi RMG exporters to gain and sustain competitive advantage in the global market according to the executives working there and (2) to understand the impact of government and chance factor in the Bangladeshi RMG exporters key resources.

To achieve these research objectives, a qualitative research design using in-depth semi-structured interviews with RMG executives in Bangladesh was carried out. The findings provide an original contribution to studies on the current competitive advantages of Bangladesh’s RMG which have been researched to a limited extent but only from a secondary data perspective.

Literature Review

Rmg industry of bangladesh.

The RMG industry of Bangladesh is considered one of the fastest-growing industries after the 1990s (Alam et al., 2017 ; Zaman, 2021 ). We can track the Bangladesh garment export industry’s history following the independence of Bangladesh in 1971. In the 1970s, the RMG trade was a micro-business enterprise that fulfilled domestic demands and was dominated by small tailoring outfits (Rasel et al., 2020 ). Tailoring was a popular business operated by skilled master tailors who could cut and sew cloth according to customers’ measurements and fittings. One such tailoring enterprise, Reaz garments, started manufacturing woven shirts in large quantities for export. The company exported Bangladesh’s first order of 10,000 woven shirts to France in 1978 (Yunus & Yamagata, 2012 ; Zaman, 2021 ).

Multi-Fiber Arrangement (MFA) offered Bangladesh a quota-free status which attracted foreign investors. This led to the establishment of several joint ventures or foreign privately owned garment manufacturing facilities in the early 1980s (Alam et al., 2017 ; Akter, 2020 ; Zaman, 2021 ). Bangladesh was brought under the MFA quota system in 1986, and this opened the doors for Bangladesh to new markets such as the USA (Ahmed, 2009 ; Akter, 2020 ; Mottaleb & Sonobe, 2011 ). In 2005, after almost 19 years, the MFA quota system was terminated. Before it was terminated, RMG exports from Bangladesh grew at an annual average rate of 19% between 1990 and 2005 (Alam et al., 2017 ; Akter, 2020 ). After the abolition of the quota system, from 2005 to 2019, the average growth rate was 21% (Export Promotion Bureau, 2019 ). Additionally, the Generalized System of Preference (GSP) allowed Bangladesh to export RMG products to the European Union (EU) without any tariff, while the tariff rate on RMG products was 12.5% for all other countries (Bhattacharya & Rahman, 2000 ; Hasan et al., 2020 ; Islam, 2021 ).

RMG Product and Export Region

The RMG products of Bangladesh are mainly categorized into Woven and Knit. In 1992, woven export accounted for 86% of total garments export and knitwear export accounted for only 14% (Alam et al., 2017 ; BGMEA, 2021a , 2021b ). However, the current scenario has dramatically changed, with woven exports accounting for 51% and knitwear exports accounting for 49% (Akter, 2020 ; BGMEA, 2021a , 2021b ). The major reason for the decline of woven export is the dependence on imported raw materials which caused a delay in production and impacted delivery time. On the other hand, domestically produced yarn and fabrics are used for knitwear production which speeds up the production process (Bhuyan & Oh, 2021 ; Chandra & Ferdaus, 2020 ; Mottaleb & Sonobe, 2011 ).

The RMG industry of Bangladesh exports a variety of RMG items for men, women, and kids, such as shirts, jackets, trousers, sweaters, t-shirts, etc. Among them, T-shirts (USD 5.6 billion) and trousers (USD 5.4 billion) have the highest export value (BGMEA, 2021a , 2021b ). Bangladesh’s RMG is concentrated mainly in two markets: the European Union (EU) and the United States of America (USA). These two markets comprise approximately 83% of Bangladesh’s total RMG export in 2020 (BGMEA, 2021a , 2021b ; Islam, 2021 ). The RMG industry’s exports to the EU were valued at 17.02 billion USD in 2020 which was the highest followed by the USA valued at 5.06 billion USD and Canada valued at 0.8 billion USD (BGMEA, 2021a , 2021b ).

Competitive Advantages of the Bangladeshi RMG Industry

Over the last 15 years, the RMG industry has revolutionized the country in terms of its contribution to GDP, employment for rural people, women empowerment, and socio-economic developments (Hasan et al., 2020 ; Mostafa & Klepper, 2018 ; Zaman, 2021 ). In 2020, Bangladesh contributed 6.4% toward the global RMG market share (Akter, 2020 ; Chandra & Ferdaus, 2020 ). This number is greater than some competitor countries like Vietnam (6.2%), India (3.3%), and Turkey (3.1%) (Hasan et al., 2020 ; Islam, 2021 ). The huge volume of garment exports helped the RMG industry to grow at a constant rate every year.

The number of RMG firms in Bangladesh has increased over time, and currently, a total of 4,406 firms produces garment items for export purposes in Bangladesh (BGMEA, 2021a , 2021b ). Low labor cost is considered as one of the primary reasons for the growth of the RMG industry in Bangladesh (Mostafa & Klepper, 2018 ; Rasel et al., 2020 ). However, low labor productivity has been an issue for the Bangladeshi RMG industry. Labor productivity in Bangladesh was found to be the lowest among the other apparel manufacturing nations such as Cambodia, Vietnam, Pakistan, India, and China (Akter, 2020 ).

The size of the RMG manufacturing firms of Bangladesh also provides a competitive advantage for the country as large manufacturing firms usually have more capital and human resources (Chandra & Ferdaus, 2020 ; Hasan et al., 2020 ; Momaya, 2001 ). They also have a higher capacity to absorb the risk than smaller firms (Agrawal et al., 2021 ; Bair et al., 2020 ). The average size of a Bangladeshi firm is 797 employees per firm, which is much higher than some competitor countries like Vietnam (426 employees per firm) and China (269 employees per firm) (Alam et al., 2017 ). Additionally, a suitable location (Dhaka, Chittagong) of Bangladesh’s RMG firms helps achieve better export performance (Akter, 2020 ; Islam, 2021 ).

The government of Bangladesh has also taken many steps to enhance the economy through liberalization policies and reforms that brought in foreign investment in the RMG manufacturing industry (Hossian et al., 2019 ; Rasel et al., 2020 ; Hasan et al., 2020 ). A bonded warehouse is one of the facilities that has been provided by the Bangladeshi government on which RMG firms can import raw materials without paying any import duty (Ahmed, 2009 ; Akter, 2020 ). The government of Bangladesh also established the Export Processing Zone (EPZ) to help the RMG manufacturing industries to grow (Rahman, 2021 ).

Additionally, product diversification and export market diversification helped Bangladesh to become a powerhouse in RMG export. The availability of domestically produced raw materials for knitwear has boosted the knitwear exports for Bangladesh, whereas the export firms have to rely on imports for manufacturing woven products (Mottaleb & Sonobe, 2011 ; Hossian et al., 2019 ; Rahman, 2021 ; Lavassani & Movahedi, 2021 ).

Although Bangladesh improved its competitive advantages, the RMG industry is still plagued by factory fires, building collapses, and labor rights violations. The collapse of the Rana Plaza factory building killed 1133 people (Mostafa & Klepper, 2018 ; Rasel et al., 2020 ; Hasan et al., 2020 ). Thousands of factory workers were also critically injured by this incident. After that incident, the European and American retailers established the Accord and Alliance (Ahlquist & Mosley, 2021 ; Liu et al., 2019 ). The Accord primarily works to make the RMG factory a safe place for the workers. They work with both the brands and trade unions to make their vision come true (Ahlquist & Mosley, 2021 ). The Alliance was also created as a collaborative initiative to improve the safety condition of the RMG industry of Bangladesh.

Conceptual Framework: Porter Diamond Theory of National Competitive Advantage

The Porter’s Diamond Model is considered a strategic economic model and explains how or why one country or nation is more competitive in a particular industry than another nation (Liu, 2021 ; Porter, 1990 ; Wang & Li, 2020 ). In this model, Porter ( 1990 ) described how a specific firm's competitiveness is related to the performance of other firms in a similar industry. He also stated that an industry or firm always tries to improve and develop its performance to gain competitiveness (Momaya, 2019 ; Alavi et al., 2020 ). The target is to gain and sustain these advantages in the international market. Policymakers, marketers, and governments use this model to design a long-term development plan for their nation and achieve a competitive advantage (Jin & Moon, 2006 ; Halife, 2020 ; Alavi et al., 2020 ; Liu, 2021 ). Porter ( 1990 ) found four primary determinants that affect firms' competitive performance, including (1) factor conditions, (2) demand conditions, (3) related and supporting industries, and (4) firm strategy, structure, and rivalry. The determinants interact with each other to develop national competitiveness for any particular industry (Liu, 2021 ; Wang & Li, 2020 ). The government and the chance factor also influence the four determinants as it has the power to impact the process of development of a nation's competitive advantage.

Factor Conditions

Factor conditions can be defined as a nation's position in production constituents, such as labor, infrastructure, and resources necessary to compete in a given industry (Alavi et al., 2020 ; Liu, 2021 ). Porter ( 1990 ) identified factor conditions as human resources, physical resources, knowledge resources, capital resources, and infrastructure. He further subdivided the factor conditions into primary and advanced factors. Primary factors include climate, location, available materials, natural resources, unskilled labor which does not require further investment. Advanced factors include skilled labor, digital data, communications, and infrastructure which can be upgraded through reinvestment and innovation.

From the Bangladeshi RMG manufacturing firm's perspective, cheap labor, location, and favorable climate can be considered as the primary factor conditions and communication, and infrastructure as advanced factor conditions (Hasan et al., 2020 ; Mostafa & Klepper, 2018 ; Rahman, 2021 ; Uddin, 2014 ; Yunus & Yamagata, 2012 ).

Demand Conditions

Porter ( 1990 ) described demand conditions as the size and nature of the home market demand for the industry's product or service. If the scope of a home market is large, firms will become more competitive and financially stable (Liu, 2021 ; Wang & Li, 2020 ). Porter ( 1990 ) suggested four aspects of demand conditions: home demand composition, demand size and pattern of growth, internationalization of domestic demand, and the interplay of demand conditions.

The demand for domestic apparel in Bangladesh is much lower compared to international demand. This lower demand lessens the competitiveness within the apparel firms. Additionally, the future of domestic apparel demand in Bangladesh has also deteriorated as the international demand is increasing constantly and the apparel firms are more focused on fulfilling the international demand (Rahman & Anwar, 2007 ; Islam, 2021 ; Zaman, 2021 ).

Related and Supporting Industries

Related and supporting industries can be defined as the availability of supplier industry or any other related industry in the market, which assist any specific industry to grow more and become more competitive (Liu, 2021 ; Tsai et al., 2021 ). It is an important determinant because the presence of related industries creates pressure for that specific firm or industry to compete nationally and internationally. Additionally, supporting industries that are highly competitive in the global market can provide cost-effective and efficient input for that firm or industry.

The related and supporting industries in the RMG industry of Bangladesh can be described as the textile raw materials industry, subcontractors, logistics, and financial institutions (Akter, 2020 ; Islam, 2021 ). The banks and insurance companies are the other two main supporting industries that assist the RMG industry by providing working capital to fulfill its contractual terms (Bhuyan & Oh, 2021 ; Uddin, 2014 ). However, the garment industry of Bangladesh didn’t get enough support from the local textile raw materials industry as the demand always remains higher than the supply. So, the garment industry had to import most of their raw materials such as yarn, zippers, buttons, and labels from other countries which increase the production lead time and product price (Islam, 2021 ).

Firm Strategy, Structure, and Rivalry

Porter ( 1990 ) described firm strategy, structure, and rivalry as conditions in the nation governing how the companies are created, organized, and managed as well as the nature of the domestic rivalry. Firm structure, strategy, and rivalry mainly depend on that nation's culture, such as how people contribute towards their nation, how they interact with each other, and how they behave within an organization (Halife, 2020 ; Tsai et al., 2021 ). Additionally, higher rivalry makes an industry attractive in the international market.

The RMG industry of Bangladesh has gradually developed its firm structure and strategy over the last two decades. Most of the RMG firms are inspected and certified by Accord on Fire and Building Safety certification established by European retailers after the building collapse tragedy in 2013 (Ahlquist & Mosley, 2021 ; Liu et al., 2019 ). The RMG firms now also have better transportation facilities that speed up the delivery process (Islam, 2021 ).

The Role of Government

Porter ( 1990 ) stated that government plays an influential role in the nation's competitiveness. The role of the government is mainly to assist the firms or industry to innovate and help them become more successful in the global market (Alavi et al., 2020 ). Porter ( 1990 ) stated that it is the firms or industry which creates competitive advantages for themselves. The government can only influence or push those firms to be competitive through favorable policies and financial help.

Bangladesh's government implemented several policies that helped in the growth of the RMG industry during its early stages. A back-to-back letter of credit (L/C) which provides a financial security or guarantee from the Bangladeshi government-owned bank for the international material supplier for any kind of failure of payment was one of those policies that helped RMG firms to grow (Alam et al., 2017 ; Islam, 2021 ). Import tariff exemptions and free warehouse facilities are also some of the major steps that have been taken by the government of Bangladesh (Zaman, 2021 ).

Porter ( 1990 ) defined chances as the event that cannot be controlled by the firm or industry authority. Moreover, chances are unexpected events on those there is little or no control. Chances could be a natural disaster, political riots, financial markets or exchange rates, military war, or any sudden situation that hamper the competitive advantages of that firm or industry (Liu, 2021 ).

The RMG industry of Bangladesh has been affected by various chance factors. Labor unrest, factory building collapse, and factory fires are the most common chance factors affecting the Bangladesh apparel business (Akter, 2020 ; Das et al., 2018 ; Uddin, 2014 ). The COVID-19 pandemic also has a harsher impact on the RMG industry of Bangladesh. The pandemic caused the temporary closure of RMG manufacturing firms due to mandatory lockdown orders from the government, downward demand shifts, and safety and health issues. Many firms had to close their business operations permanently as they did not have enough financial backups to restart their firms.

Methodology

This study aims to gain an in-depth understanding of the firm resources that the Bangladeshi RMG industry has. Additionally, the study also investigates how various factors such as ownership, government policies, nation's environment, and financial agreements affect the resources of the RMG industry, which helped them gain a competitive advantage. A qualitative interview was employed to identify the original resources that the RMG firms of Bangladesh have (Evans & Lewis, 2018 ). A qualitative interview was used because qualitative inquiry helps to better understand a topic of which little is known (Creswell, 2014 ; McGrath et al., 2019 ).

As this study is exploratory, semi-structured interviews were employed as a suitable research design (Evans & Lewis, 2018 ). A semi-structured interview allows for an open-ended response from the interviewee to get more in-depth information and encourage two-way communication (McGrath et al., 2019 ). Table ​ Table1 1 provides a sample of questions that were asked in the interviews.

Interview questions sample

A participant list was developed in the following ways to locate a group of participants representing Bangladesh's RMG industry: (a) through a business directory, and (b) through personal contacts. Upon approval of the university Institutional Review Board, participants were recruited. In total 68 participants were selected for this study who represented the management of their organization. Participants were then contacted by email. Study details and IRB approval forms were also provided. Out of the 68 emails sent, 23 participants responded to the emails. However, saturation was met with 14 interviews, as additional interviews yielded no new information (Francis et al., 2010 ; McGrath et al., 2019 ). International phone interviews were arranged with the selected participants between March 2020 and August 2020. Table ​ Table2 2 presents descriptions of the study participants.

Basic demographic description of interview participants

Data Collection and Analysis

Semi-structured interviews allowed for supplementary questions and dialouge (Evans & Lewis, 2018 ). The length of the interviews lasted from 30 to 60 min. First author conducted all the interviews with the managers and executives of the Bangladeshi RMG industry. All the interviews conducted were recorded with the consent of the interviewees and the audio recordings were transcribed accordingly.

All subjects and materials of the interview process were coded without any personal identifiers. Each interview transcript was reviewed and coded by the individual researcher. Researchers used an open coding process which assisted them in identifying the recurring codes (Parameswaran et al., 2019 ; Tavory, 2020 ). After every interview, researchers also wrote the analytic memos to identify the connections between the codes (Saldana, 2016 ; Tavory, 2020 ). Memoing helped to get or understand any predetermined meanings from the data (Evans & Lewis, 2018 ). Intercoder Reliability was found to be 92.37 percent which is higher than the recommended threshold (Creswell, 2014 ; Saldana, 2016 ; Parameswaran et al., 2019 ).

The data obtained after the transcribing and coding process were then interpreted by emerging themes (Tavory, 2020 ). A comprehensive analysis of the words in each transcript was conducted, followed by a comparison of themes and patterns across the transcripts. The data were broken up and arranged into themes continuously until the patterns, and corresponding categories emerged (Evans & Lewis, 2018 ). The researcher's reflexivity and participant feedback were the validation strategies used to ensure the themes' validity (McGrath et al., 2019 ). The themes obtained from the interviews were sent to all of the participants for their feedback and 8 of the participants responded and their feedback was positive.

Key Competitive Advantages

Participants described four key competitive advantages that they have over their competitors: (a) price advantage attained through aggressive product pricing, (b) on-time delivery advantage through speedy transport infrastructures, (c) quality advantage through the skilled workforce, and (d) product advantages that the Bangladesh firms acquired through competitive price and product variety.

Price Advantage

Price advantage emerged as the most critical competitive advantage. Twelve participants described the capacity to provide products at market prices as a competitive advantage. To the participants, price advantage did not necessarily mean the lowest price. Out of the fourteen participants, three stressed the importance of maintaining a "competitive price" to sustain their business. Avi and Nafisa, both merchandisers, working at an export firm, described the apparel business of Bangladesh by expressing his belief that it is controlled by "affordable and competitive" product price.

Avi: “Production delays are a strict no-no in today's cut-throat garment export business. The margins have reduced, and the lead times have shortened. To sustain our business, price is critical, or else we lose orders to Vietnam and China”. Nafisa: “We are always conscious about our pricing and try to maintain a competitive price for all of our products”.

On-Time Delivery Advantage

The ability to deliver products on time emerged as the second important recurring theme. Developing the physical infrastructure and upgrading the machinery seemed to be essential resources for achieving an on-time delivery advantage. Eleven participants stated transportation infrastructure as a critical firm resource. Previous research (Yunus & Yamagata, 2012 ; Alam et al., 2017 ) pointed out the lack of proper infrastructure for global competition in the Bangladeshi RMG industry. However, in this study, it was interesting to see that the participants emphasized the infrastructure developments.

The Bangladeshi RMG firm's investment in transportation infrastructure and efforts to increase productivity is a relatively new phenomenon. Three participants mentioned that they are in their initial phases of implementing these efforts. Seven participants described "transportation, shipping, and cargo services" and four participants described "government policies in improving transport facilities" as the infrastructural development activities that help Bangladeshi firms attain on-time deliveries. Bikas, a merchandiser of an apparel export firm, cited "shipping company" and "government schemes" as crucial resources to deliver products on time regularly:

Bikas: “Government export schemes are very helpful. These schemes reduce the lead time in production and help us to deliver the product on time”. Anwar: “Timely delivery is very important for us as we want to sustain a good relationship with our buyer”.

Quality Advantage

The ability to provide products of a better quality was found to be another essential competitive advantage. Eight out of fourteen participants described "ensuring quality" as a key competitive advantage. Two participants also stressed the importance of having "skilled workers" to maintain good quality to attain competitive advantage. Five of the study participants shared that a quality product is a product that would satisfy buyers so that the participants do not have to repeat production. "No compromise on quality" was found to be an important trend among the participants. Som, a senior executive in an apparel export firm, stated that having a robust technical team was essential in maintaining product fit, product variety, and upholding the quality standard requirements. It seemed that quality is an essential component for developing a good relationship with the buyer.

Som: “For us, better product quality is of utmost importance as we are working with quality and not quantity. We cannot afford to lose buyers in today's economy”. Rahman: “We ensure quality and commitment. We have a high profile technical and quality team to improve the lean manufacturing process”.

Product Advantage

Six participants described the ability to provide variety in their product at a reasonable price as one of their key competitive advantages. The ability to produce in "huge" or "large" quantities also seemed to be aiding the export firm's product advantage. Three participants described the ability to manufacture in large quantities as a key resource. "Training programs" and "the sharing of technical knowledge" between buyers and firm managers also were found to be consistent key resources that helped the firms attain product advantage.

Rup: “Foreign buyers share their knowledge and experience about the latest production system and any specialized fabric. That helps us to develop our skills”.

Porter's Determinants:

Factor conditions to build competitive advantages.

The managers described the unique factor conditions of the Bangladeshi RMG export firms as (a) Accord and Alliance certification, and (b) human resources.

Almost all participants described certifications by Accord and Alliance as a factor condition. This was not surprising, as the Bangladeshi RMG industry has faced many accidents due to poor physical infrastructure, the most consequential incidents being the Rana Plaza building collapse and the Tazreen factory fire. The above certifications seemed to authenticate the firm's claim of having a strong infrastructure and were used as a tool to attract buyers.

Shaan: “Accord engineers have physically verified all the items based on the standards developed by the Bangladesh Government, Accord & ILO”.

Human resources emerged as the next most frequently described factor condition to develop and maintain a competitive advantage. Seven participants described employees, skilled operators, and workers as key human resource management factors for their organization. This was consistent with Zaman ( 2021 ) who found skilled workers and laborers to be an essential resource for the growth of Bangladesh's RMG industry.

A good work environment and better working relationships emerged as important human resource development processes. The managers described providing a good work environment as a retention tool as it created positive energy for the internal growth of their employees. They also emphasized the importance of having a "better relationship" with workers. It may be deduced that a better relationship with workers can lead to higher productivity.

Som: “The owner keeps a good relationship with the workers and officers and motivates everyone. That's why it is helpful for us to work in this company”.

Demand Conditions to Build Competitive Advantages

Quality, infrastructure, good customer relationships, labor welfare, and productivity were found to be the critical factors influenced by demand conditions. Out of the fourteen firms analyzed, three firms exclusively exported to the EU and eleven firms exported to both the USA and EU. The key factors found to be influenced by the EU's demand conditions were: (a) quality and (b) good relationship; and by the USA's demand conditions: (a) infrastructure and (b) labor welfare and productivity.

RMG firms working with EU buyers focused both on quality and quantity as the EU buyers give a large number of orders and do not compromise on quality. Also, the firms need to put a competitive price tag for EU buyers to maintain a strong relationship that will bring more orders for the firms. It was also found that all fourteen export firms preferred working with EU buyers as they felt more confident in communicating with the EU buyers than other buyers. On the other hand, buyers from the USA focus more on the firm's infrastructure and labor conditions. After the Rana Plaza incident, US buyers have been more stringent on their requirements. They also stress quality products along with quantity.

Avi: “We provide quality products and on-time shipment. The buyers arrange training programs and share technical knowledge with us that helps us in maintaining buyer's quality standards”.

Supporting Industries that Help Build Competitive Advantages

Textile raw materials industry, shipping services, transportation and cargo services, spinning and dyeing industries emerged as the key supporting industries that influenced the competitive advantage of Bangladeshi RMG firms. Nine out of the fourteen participants named shipping, transportation, and cargo services as the main supporting industries. Competitive pricing and a well-established relationship with suppliers were found to be the vital competitive resources obtained through their supporting industries. In this study, Som described how transportation companies affected product pricing and could "make or break" an order while stressing the importance of the transportation companies. Porter ( 1990 ) stated that domestic firms in related industries often build a formal alliance and shared activities, which has happened in Bangladesh's RMG industry.

However, participants also shared that Bangladesh needs to source textile raw materials from outside the country due to lack of local supply. Bangladesh imports most of their yarns, woven fabrics, dyeing chemicals, garment accessories, and packaging materials from China which leads to the higher product price and thereby negatively affects the competitive price advantage.

Firm Ownership Type to Help Build Competitive Advantages

Firm ownership types that emerged from the study were domestic-owned firms, joint venture firms, and foreign-owned firms. The majority of the participants (nine out of fourteen) belonged to domestic ownership firms. (a) On-time delivery, (b) quality assurance, and (c) human resources were the key resources influenced by domestic ownership. However, foreign-owned firms (two out of fourteen) seemed to emphasize (a) marketing strategies, (b) quality standards, and (c) product pricing.

It was intriguing to observe that most (seven out of nine) participants believed that domestic ownership helped them maintain a good relationship with both the buyer and worker. Participants also described foreign ownership as a boon as "foreign owner has networking links with a lot of buyers" and brings business to factories. However, the participants described foreign ownership as having "less communication with workers" and "higher factory overhead cost."

Quality was found to be a shared resource across firm ownership. Five participants described quality structure, product quality, and quality enforcement as essential resources of their organization. The participants believed that they received constant orders from the buyers because of their product quality. Maintaining the quality standards across product lines seemed to be a common theme among Bangladeshi RMG export firms. Three participants described "a consistent quality level" as a key tool in ensuring uniform product quality. Interestingly, the participants focused on the long-term benefits and did not want to compromise quality for short-term profits.

Palash: “We never compromise our quality. Having a good quality is responsible for the reputation of our company”.

Government Policies that Promote Competitive Advantages

The central government policies that influenced the competitive advantages of Bangladeshi RMG export firms were export subsidies, export processing zones (EPZ), and financial services. It was interesting to note that all fourteen participants described the government's EPZs and subsidies as a success. Twelve-of-the-fourteen participants identified these government policies as having long-term goals and objectives, positively impacting these firms' competitive advantages.

The establishment of EPZs encouraged investors to construct RMG export firms. The EPZs were successful in attracting foreign investors to set up their RMG export firms. Six participants stated that the facilities provided under the EPZs have helped their companies be more competitive globally. Shaan stated that the EPZs provided the necessary infrastructure including proper transportation and electricity.

Nish: “Government export schemes have been very helpful. There are enough EPZs and these have helped the apparel business in Bangladesh”.

Access to international banking and financial services was found to be another government support that was helping Bangladeshi RMG firms. Easy access to banking facilities for the apparel firms and business loans with low-interest rates also were found as key resources helping Bangladeshi RMG firms to gain a competitive advantage. Alam et al. ( 2017 ) also found banking facilities as a major contributor to progress in the RMG industry of Bangladesh.

Som: “Government has a very positive approach to increase the business volumes by giving loans to the industry with a lower rate of interest and providing international banking facilities”.

COVID-19 was found to be the leading chance factor influencing the competitive advantages of Bangladeshi RMG export firms at the point of the interviews. Nine out of the fourteen participants cited the novel coronavirus as a chance factor affecting them. They also reported that the COVID-19 pandemic has drastically affected their key resources. The COVID-19 pandemic seems to be assisting the firms to reduce wastages widespread in the Bangladeshi RMG export industry. Most firms had to reduce their overhead costs, which has prompted them to figure out ways to improve their productivity due to the pandemic.

Avi: "The COVID-19 virus has affected our production. We cannot source fabric from China. Many of our production lines are stopped”.

Though COVID-19 slowed down businesses, it brought the inefficiencies of the Bangladeshi RMG export industry into the open. The pandemic also exhibited Bangladesh's reliance on foreign raw materials. Due to COVID-19, the import of raw materials from foreign countries had to be halted, which greatly impacted factory production lines. Most of them do not have the fabrics they need to produce apparel for exports. The overall findings of this study is illustrated below (Fig.  1 ).

Bangladesh's competitive advantages.

Adapted from Porter ( 1990 ) model

Discussion and Conclusion

The RMG industry has contributed vastly to the economic development of Bangladesh, a small South Asian country that now has moved from low-to-middle-income status. After the abolition of the quota system, 2005 to the 2022, the average growth rate of the RMG export business in Bangladesh is 21%. This is higher than some other competitor neighbouring countries (India, Pakistan). The RMG industry is now contributing about 20% of the country's GDP. Additionally, the RMG industry currently employs around 5 million people, and about 80% of the workers are women, thereby making the country's women more empowered than before.

The results of this study revealed exciting findings of the RMG industry of Bangladesh. First, competitive price is considered as the most important resource by the RMG exporting firms in Bangladesh, followed by on-time delivery and quality. Second, most RMG firms of Bangladesh seemed to have good infrastructure, indicating that they can produce large quantities of orders and can deliver on time, thus attracting foreign buyers to Bangladesh. Third, ownership type and buyer type have a significant influence on the major resources of the Bangladeshi RMG firms as it was found to impact the firms' physical and organizational resources positively. Lastly, government policies have had a positive impact on the RMG export business of Bangladesh as it has provided exporting firms with several facilities that have helped the firms to grow and prosper.

The study results have provided major implications and contributions. First, the study findings provide a clear picture of the major resources of the Bangladeshi RMG export industry, which contribute towards competitive advantages. The findings also provide information about the factors that affect the competitive advantages of the RMG industry. Second, the findings of this research on major resources might assist the RMG industry of Bangladeshi in developing and sustaining those resources to achieve a competitive advantage. Third, the study findings may help both domestic and foreign investors who are planning to invest in the RMG export business of Bangladesh. Both local and foreign investors who planned to invest in the RMG industry of Bangladesh need to develop the major resources before investing. Fourth, policymakers also may find the study results very useful. Participants in this study described some government policies such as setting up EPZs and tax reduction as very useful to assist them in being more successful. Participants also described some governmental work activities like long-work processing time, complex work procedures that negatively affect their business. Policymakers might need to develop new export-friendly policies and improve the existing ones for the rapid growth of this RMG industry. Finally, the findings of this study might help the apparel or garment-related educational programs in Bangladesh. Adding the study findings to the existing curriculum may help students gain a deeper understanding of the competitive advantages of Bangladesh's RMG export industry so they can help the RMG export industry in the future to achieve unique key firm resources. The study findings support and expand Porter’s ( 1990 ) theory as we used the model to understand the competitive advantages of the RMG firms in Bangladesh. Also, it helped in understanding the different factors influencing the Bangladeshi RMG firm’s key resources.

The study has certain limitations. It was conducted based on qualitative interviews of fourteen top-level management personnel in selected RMG firms of Bangladesh. It was not possible to collect data from all types of RMG firms in Bangladesh. Additionally, phone interviews have certain limitations such as the researcher not being able to observe the non-verbal responses of the participants. Further quantitative studies involving survey method with a large number of participants across different geographical areas are needed to generalize the results. Future research is also recommended to better understand the effect of supporting industries and chance on the export competitiveness of the Bangladeshi RMG export industries.

Key Questions Reflecting Applicability in Real Life

• How present competitive advantages in the RMG industry making Bangladesh a manufacturing hub?
• Which resources of the RMG industry can help with rapid recovery from COVID-19 pandemic?
• Which factors are mostly affecting the Bangladeshi RMG production?
• What role the government of Bangladesh playing in the development of the RMG export industry?
• How can Bangladesh be the next China in RMG export?

Acknowledgements

The first author (ISS) would also like to express sincere thanks to the Department of Fashion Dress and Merchandising of the West Virginia University for accepting him as a graduate student, supporting him to conduct research, attend classes, seminars and conferences, and giving him a rare experience. Authors would like to thank the reviewers of the JGBC editorial team and Dr. Kirankumar Momaya for their kind suggestions and support.

Biographies

is a master’s student in the department of Fashion Dress and Merchandising (FDM) at West Virginia University, USA with a major in Design and Merchandising. He completed his Bachelor’s degree in Apparel Manufacturing Technology from Ahsanullah University of Science and Technology, Bangladesh. His research interests include labor welfare, international trade policies, small and micro-business, and consumer behavior.

is an assistant professor at the Fashion, Dress and Merchandising department in the School of Design and Community Development, West Virginia University. He earned his Doctorate and Master’s from the University of Missouri. His research program explores the apparel industry from the social, economic and humane viewpoint. His research program investigates the human factor of the industry, social sustainability, small fashion business competitiveness and fashion industry labors issues.

Author Contributions

First author (ISS) collected, analyzed and interpreted the data regarding the competitive advantage, history and growth of Bangladeshi apparel industry, and drafted the manuscript. Second author (DD) conceived and designed the study and revised the manuscript critically for important intellectual content. Both authors read and approved the final manuscript.

Not applicable.

Availability of Data and Materials

Declarations.

The authors declare there is no conflict of interests.

• Agrawal S, Singh P, Mazumdar M. Innovation, firm size and ownership: a study of firm transition in India. International Journal of Global Business and Competitiveness. 2021; 16 (1):15–27. doi: 10.1007/s42943-021-00022-y. [ CrossRef ] [ Google Scholar ]
• Ahlquist JS, Mosley L. Firm participation in voluntary regulatory initiatives: the Accord, Alliance, and US garment importers from Bangladesh. The Review of International Organizations. 2021; 16 (2):317–343. doi: 10.1007/s11558-020-09376-z. [ CrossRef ] [ Google Scholar ]
• Ahmed N. Sustaining ready-made garment exports from Bangladesh. Journal of Contemporary Asia. 2009; 39 (4):597–618. doi: 10.1080/00472330903076891. [ CrossRef ] [ Google Scholar ]
• Akter P. An overview of the ready-made garment (RMG) sector of Bangladesh: from origin to the current state of pinnacle. Kyushu University Graduate School of Economics. 2020 doi: 10.15017/4067129. [ CrossRef ] [ Google Scholar ]
• Alam M, Selvanathan E, Selvanathan S. Determinants of the Bangladesh garment exports in the post-MFA environment. Journal of the Asia Pacific Economy. 2017; 22 (2):330–352. doi: 10.1080/13547860.2017.1292768. [ CrossRef ] [ Google Scholar ]
• Alavi A, Shokri M, Zhiani B, Zhiani S. Analysing competitive advantage of Iranian automotive industry using Porter's diamond model, case study: Iranian car manufacturers. International Journal of Business and Systems Research. 2020; 14 (3):298–313. doi: 10.1504/IJBSR.2020.108269. [ CrossRef ] [ Google Scholar ]
• Bair J, Anner M, Blasi J. The political economy of private and public regulation in post-Rana Plaza Bangladesh. ILR Review. 2020; 73 (4):969–994. doi: 10.1177/0019793920925424. [ CrossRef ] [ Google Scholar ]
• Bari MS, Jin BE. Understanding apparel brand evolution patterns in Bangladesh: An industry life cycle perspective. Journal of Fashion Marketing and Management: An International Journal. 2021; 25 (3):548–566. doi: 10.1108/JFMM-06-2020-0118. [ CrossRef ] [ Google Scholar ]
• BGMEA. (2021b). General Member List. Retrieved February 24, 2021, from BGMEA: https://www.bgmea.com.bd/page/member-list .
• BGMEA. (2021a). Export Performance List. Retrieved February 24, 2021, from BGMEA: https://www.bgmea.com.bd/page/export-performance-list .
• Bhattacharya, D., & Rahman, M. (2000). Experience with Implementation of WTO-ATC and Implications for Bangladesh (No. 7). Dhaka: Centre for Policy Dialogue (CPD). Retrieved September 29, 2019, from https://cpd.org.bd/pub_attach/op7.pdf
• Bhuyan MI, Oh KY. Exports and inequality: evidence from the highly concentrated textile and garment sector of Bangladesh. Journal of South Asian Development. 2021; 16 (2):293–309. doi: 10.1177/09731741211024870. [ CrossRef ] [ Google Scholar ]
• Chandra S, Ferdaus J. Contribution of ready-made garments industry on the economic development of Bangladesh: an empirical analysis. Economics. 2020; 7 (2):295–307. doi: 10.18488/journal.29.2020.72.295.307. [ CrossRef ] [ Google Scholar ]
• Creswell JW. Research Design: Qualitative, Quantitative and Mixed Methods Approaches. 4. Sage; 2014. [ Google Scholar ]
• Das T, Barua U, Ansary M. Factors affecting vulnerability of ready-made garment factory buildings in Bangladesh: An assessment under vertical and earthquake loads. International Journal of Disaster Risk Science. 2018; 9 :207–223. doi: 10.1007/s13753-018-0177-6. [ CrossRef ] [ Google Scholar ]
• Evans C, Lewis J. Analysing semi-structured interviews using thematic analysis: Exploring voluntary civic participation among adults. SAGE Publications Limited; 2018. pp. 1–6. [ Google Scholar ]
• Export Promotion Bureau. (2019). Retrieved from Export Promotion Bureau of Bangladesh: http://www.epb.gov.bd/ .
• Francis JJ, Johnston M, Robertson C, Glidewell L, Entwistle V, Eccles MP, Grimshaw JM. What is an adequate sample size? Operationalizing data saturation for theory-based interview studies. Psychology Health. 2010; 25 :1229–1245. doi: 10.1080/08870440903194015. [ PubMed ] [ CrossRef ] [ Google Scholar ]
• Halife, H. (2020). Analysis of Competitiveness of Turkish Textile Sector Based on The Porter’s Diamond Model.  Stratejik Yönetim Araştırmaları Dergisi , 3(1), 27–49. Retrieved from https://dergipark.org.tr/en/pub/syad/issue/53503/691702 .
• Hasan I, Islam MN, Khan SR. Ready-made garment industry attractiveness: The case of Bangladesh garments’ blue-collar employees. International Journal of Emerging Markets. 2020 doi: 10.1108/IJOEM-03-2019-0232. [ CrossRef ] [ Google Scholar ]
• Hossian MS, Kabir R, Latifee EH. Export competitiveness of Bangladesh readymade garments sector: challenges and prospects. International Journal of Research in Business and Social Science. 2019; 8 (3):45–63. doi: 10.20525/ijrbs.v8i3.205. [ CrossRef ] [ Google Scholar ]
• Islam MS. Ready-made garments exports earning and its contribution to economic growth in Bangladesh. GeoJournal. 2021; 86 (3):1301–1309. doi: 10.1007/s10708-019-10131-0. [ CrossRef ] [ Google Scholar ]
• Jin B, Moon H-C. The diamond approach to the competitiveness of Korea's apparel industry. Journal of Fashion Marketing and Management. 2006; 10 (2):195–208. doi: 10.1108/13612020610667504. [ CrossRef ] [ Google Scholar ]
• Kathuria L. Analyzing competitiveness of clothing export sector of India and Bangladesh. Competitiveness Review: An International Business Journal. 2013; 23 (2):131–157. doi: 10.1108/10595421311305343. [ CrossRef ] [ Google Scholar ]
• Koty, A. C., & Zhou, Q. (2019, October 15). Minimum Wages in China 2019 . Retrieved from China Briefing: https://www.china-briefing.com/news/minimum-wages-china-2019/ .
• Lavassani KM, Movahedi B. Firm-level analysis of global supply chain network: role of centrality on firm’s performance. International Journal of Global Business and Competitiveness. 2021; 16 :86–103. doi: 10.1007/s42943-021-00026-8. [ CrossRef ] [ Google Scholar ]
• Liu Y. Hong Kong’s cultural and creative industrial—an analysis from the perspective of “Porter Diamond Model” International Conference on Economics, Management Engineering and Education Technology. 2021 doi: 10.25236/icemeet.2021.049. [ CrossRef ] [ Google Scholar ]
• Liu X, Mishra A, Goldstein S, Sinha K. Toward improving factory working conditions in developing countries: An empirical analysis of Bangladesh ready-made garment factories. Manufacturing & Service Operations Management. 2019; 21 (2):379–397. doi: 10.1287/msom.2017.0679. [ CrossRef ] [ Google Scholar ]
• McGrath C, Palmgren PJ, Liljedahl M. Twelve tips for conducting qualitative research interviews. Medical Teacher. 2019; 41 (9):1002–1006. doi: 10.1080/0142159X.2018.1497149. [ PubMed ] [ CrossRef ] [ Google Scholar ]
• Menzel A, Woodruff C. Gender wage gaps and worker mobility: evidence from the garment sector in Bangladesh. Labour Economics. 2021 doi: 10.1016/j.labeco.2021.102000. [ CrossRef ] [ Google Scholar ]
• Momaya K. International Competitiveness: Evaluation and Enhancement. Hindustan Publishing Corporation; 2001. [ Google Scholar ]
• Momaya KS. The past and the future of competitiveness research: a review in an emerging context of innovation and EMNEs. International Journal of Global Business and Competitiveness. 2019; 14 :1–10. doi: 10.1007/s42943-019-00002-3. [ CrossRef ] [ Google Scholar ]
• Mostafa R, Klepper S. Industrial development through tacit knowledge seeding: Evidence from the Bangladesh garment industry. Management Science. 2018; 64 (2):613–632. doi: 10.1287/mnsc.2016.2619. [ CrossRef ] [ Google Scholar ]
• Mottaleb, K. A., & Sonobe, T. (2011, October). An Inquiry into the Rapid Growth of the Garment Industry in Bangladesh. Economic Development and Cultural Change, 60(1), 67–89. doi:10.1086/661218.
• Nadiruzzaman M, Rahman M, Pal U, Croxton S, Rashid MB, Bahadur A, Huq S. Impact of climate change on cotton production in Bangladesh. Sustainability. 2021; 13 (2):574. doi: 10.3390/su13020574. [ CrossRef ] [ Google Scholar ]
• Parameswaran U, Ozawa-Kirk J, Latendresse G. To live (code) or to not: A new method for coding in qualitative research. Qualitative Social Work. 2019; 19 (4):630–644. doi: 10.1177/1473325019840394. [ CrossRef ] [ Google Scholar ]
• Paul, R. (2018, September 13). Bangladesh raises wages for garment workers. Retrieved from Reuters.com: https://www.reuters.com/article/us-bangladesh-garments/bangladesh-raises-wages-for-garment-workers-idUSKCN1LT2UR .
• Porter M. The competitive advantage of nations. Harvard Business Review. 1990; 68 (2):73–93. [ Google Scholar ]
• Rahman S. The Bangladesh garment industry and the global supply chain: choices and constraints of management. Routledge. 2021 doi: 10.4324/9781003153238. [ CrossRef ] [ Google Scholar ]
• Rahman, N., & Anwar, J. (2007). The sustainability of RMG as a globally competitive industry: Porter diamond perspective. Journal of Business Studies , 28 (2). https://ssrn.com/abstract=1152095
• Rasel M, Das D, Khan M. Current scenario of textile sector in Bangladesh (2019); A comprehensive review. International Journal of Innovative Studies in Sciences and Engineering Technology (IJISSET) 2020; 6 (1):52–55. [ Google Scholar ]
• Saldana J. The coding manual for qualitative researchers. Sage; 2016. [ Google Scholar ]
• Tavory I. Interviews and inference: Making sense of interview data in qualitative research. Qualitative Sociology. 2020; 43 (4):449–465. doi: 10.1007/s11133-020-09464-x. [ CrossRef ] [ Google Scholar ]
• Tsai PH, Chen CJ, Yang HC. Using porter’s diamond model to assess the competitiveness of Taiwan’s solar photovoltaic industry. SAGE Open. 2021; 11 (1):2158244020988286. doi: 10.1177/2158244020988286. [ CrossRef ] [ Google Scholar ]
• Uddin, M. (2014). How Bangladeshi Ready Made Garment Industry can be competitive in the global market. https://urn.fi/URN:NBN:fi:amk-2014090113682 .
• Wang Y, Li L. Analysis of competitiveness of high-tech industry in Nanjing based on Porter Diamond Model. Destech Transactions on Engineering and Technology Research MCAEE. 2020 doi: 10.12783/dtetr/mcaee2020/35096. [ CrossRef ] [ Google Scholar ]
• Yunus, M., & Yamagata, T. (2012). The garment industry in Bangladesh. Dynamics of the Garment Industry in Low Income Countries: Experience of Asia and Africa, chapter 6. Retrieved September 28, 2019, from https://pdfs.semanticscholar.org/e77b/bea34abdf7d935a2439d4ff031cd73f8dcf3.pdf .
• Zaman S. Field Guide for Research in Community Settings. Edward Elgar Publishing; 2021. Researching the garment sector in Bangladesh: fieldwork challenges and responses. [ Google Scholar ]

Term Paper on Management System of Bangladesh Garments Industry

As a developing country like Bangladesh RMG play a vital role for our total economy. Its contribution in GDP 76%. Bangladesh has become one of the important exporter of quality ready made garments in the foreign market. The main objectives of this tern paper are to analysis the growth and developments of RMG Bangladesh of RMG Sector and to know the management system of Bangladesh Garments Industries. And finally find out some problems of management system of Bangladesh Garments Industries and recommend its solutions.

Introduction

Bangladesh is a developing country RMG play a vital role in our economy. Its contribution in GDP 76%. After introducing this sector in our country unemployment problem solved at some extent. Though the economy of our country is primarily agro based but without industrialization it is doubtful, whether a country like Bangladesh can break out its cycle of poverty and decrease the even  loaded foreign loan.

Bangladesh has recently emerged as an important supplier of quality  readymade garments in the global market. From a modest start couple  of years of back, BD export of RMG increased considerably over the past few years resulted in an export earning of Tk. 99,21,80 million in financial year 2006-2007 from in earning of Tk. 59.00 million  in 1980-1981. Initially the market for this product was limited to a few west European countries, which have been subsequently expanded to the U.S.A. Canada. Scandinavian, Nordic, Middle East countries. It is a fact that increasing production and export earning of RMG hold the key to save the country from the present economic depression. the sector has now occupied an important place in our national economy. But all is not well in this sector. It faces number of challenges. Because of mismanagement. To overcome this challenges, find out the problems of management system of this sector and try to solve. The numerous present study makes an attempt to identify the measure necessary solve these challenges for the greater interest of the country.

Statement of the problem

The soul of Bangladesh economy is the Garments Industry. A lions portion of export earning is gained by this sector. But after phased the Quota system it faced number of challenges the main challenge by the RMG sector of BD is production problem. Due to short supply of local fabrices and accessories this sector could not handle production smoothly. Currently the RMG sector spends approx 65% of their export earning on import of these fabrices. Last year (2005-06) our export income was 360 crore US$ but import cost for fabrices and others were 200 US$.

So to maintain the status in the global market and today’s profit the industries have to reduce production costs.

Increased productivity of the workers may reduce this costs. The owners may follow the most popular way of cost reduction which is to pay workers less and cut their facilities, it is certainly true that those are affected most of them are workers, many of them might lose their jobs and those who will still have them will be offered lower wages with fewer working facilities than now.

Objectives of Study

The main objectives of the study are as follows:

(i)      Growth and developments of RMG Bangladesh of RMG Sector.

(ii)     To know the management system of Bangladesh Garments Industries.

(iii)    To analyse the problems of management system of Bangladesh Garments Industries and its solutions.

Research Method

The Prepare a term paper on A Study on Management System of Bangladesh Garments industry: Problems and Solutions I have to accumulatate information collecting data from two sources-

(1) Primary source  (2) Secondary source

I have applied questionnaire method to collect data from primary source. And I have gone through a number of books, articles & essays published in different daily newspaper, financial review etc. that are concerned with RMG sector labourers & labour law.

Readymade garments is an well known concept to all. It means to make various types of dress by cloth and thread to sell in the local market as well as in the global market. More clearly saying, the  readymade garments industries are established  only to manufacture usable garments.

The term garments management means the technique of controlling on garment  in order to achieve its purpose or objective which is possible only when office is well organized and managed.

Review of literature

It is very hard task for me to prepare a term paper on “A Study on management system of Bangladesh Garments industries: Problem and Solution” because the time is very limited. In spite of limited time, I tried my level best to make the term paper. There are a lot of books journals, publications , weekly and monthly magazine in the market. I have taken help from such type of sources to make the term paper. The name of  the sources are Rezaul and Brothers, Kyatex apperal management, Sliknit Garment, Pacific Garments, Dada garments etc. I have also collected some information’s form the employees of Chaity garments at Uttara in Dhaka. I have gone through some articles and journals to make the term paper. I also have collected some data and information’s from the internet. The mentionable journal that I have gone through to make this term paper are the journals of NAEM, Problems and prospect of RMG sector of Bangladesh – A report  of BGMEA research  cell on oct. 2005, Bangladesh export statistics 2005- 2006 Dhaka Bangladesh.

Growth and Development of RMG

Against the backdrop of over population, under employment and mismanagement in public sector resulting in financial burden on the nation, the export oriented garment sector emerged as the savior assuring job opportunity for the unemployed and foreign exchange earning to the nation. Entrepreneurs without any help and guide line from any Govt. agency developed this sector exclusively with their own efforts,’’ In early 70’s garment as a prospective industry was unknown both to our economic planners and entrepreneurs. In mid 70’s when some of the developing countries of South East Asia like Taiwan, Hongkong, South Korea were shifting into the manufacture of High tech” products, manufacturing of basic and labor incentive products were being shifted to lesser developed countries of the region. This was mainly due to phenomenal increase in labor cost in the Readymade Garments house of Korea, Hongkong and Taiwan. In this circumstance, many companies had gone out to per capita income. In this context BD was targeted.

The growth of Garment industries in BD is comparative recent one. During the British period, there was no Garment factory in this part of the Indo-Pak subcontinent. In 1960, the first Garment industry in BD was established at Dhaka and till 1971 the number rose to five. But these Garment factories were intended to serve domestic market only. In the years 1976 and 1977, some entrepreneurs came forward to set up 100% export-oriented Garment factory. Mr. Reaz of Reaz Garments and Mr. Ashrf of Asharf Garments are the pioneers of this sector and started their Garment business much earlier. However the revaluation in this sector came in eighties. Since then, the Garment sector of BD has been playing a dominant role to shape its economy and export trade. After the liberation of BD, when the countries traditional items of port could not yield expected result, in the late 70’s the Govt. and a section if entrepreneurs young, educated and dynamic began to emphasize on the development of non traditional items of export. Starting in the late seventies, the Garment sector of BD came into prominence in the middle of eighties. During the last six years, this sector marched onward from its stage of adolescence into matured childhood. By the year 1983, Readymade Garment (RMG) emerged to be a non traditional export-oriented sectors most promising in the socio-economic context of the country. By that time, those entrepreneurs felt the necessity of a sect oral trade body, non Govt. in nature, free from traditional bureaucracy, to help the RMG sector and boost up the foreign exchanges earnings of the country urgently needed at that time. Responding to that necessity, 19 RMG manufacturers and exporters joined together and by their untiring efforts got Bangladesh Garment Manufacturers and exporters Association (BGMEA) in corporate on February 20, 1983. Today it proudly declares registered membership of Garment manufacturers and exporters, To establish a healthy business environment for a close and mutually beneficial relationship among the manufacturers, exporters and importers in the process ensuring a steady growth in the foreign exchange earnings of the country. Now BGMEA has been playing a very strong role for development of RMG sector.

The RMG sector of BD is characterized by small, medium and a few large private owned enterprises, which manufacture goods mainly under contract, as per the foreign buyers designs and specifications. While there were 21 units in the country in 1981, the number of units increased to 3000 in 2000. the following table-1 shows the trends of the growth of RMG sector in BD during a period from 2000-2006. the highest growth was in 1993 due to increase of buyers order surprisingly and liberal govt. policy. Moreover, a number of conducive factors may have helped to-

Table : Year wise growth of RMG Unites

Source :- Research Cell of BGMEA

Rapid growth of RMG sector: The factors are as follows : (i) Average high educational background of entrepreneurs who took up garment business, (ii) Relative low capital base (iii) Short gestation period (iv) Easy and liberal bank loan, (v) Easy availability of technical know-how, (vi) Related chief and easy labor, (vii) Appropriate Govt. supports i.e. easy sanctioning procedure from dept. of Textile, bonded warehouse facilities, simplification of administrative procedure, introduction of back to back letters of credit (L/C) facility, tax holiday, allowing import of capital machinery at nominal rate of duty, arrangement of trade delegations and participation on export fair to promote business, arrangement of textile agreement with EEC i.e. issuing textile Certificate of Origin, Concluding of agreement with USA to protect Bangladeshi exporter and (viii) High demand of readymade garments product.

* Now the growth rate of RMG unites decline to 25% only.

Contribution of the RMG Industry

RMG business started in the late 70s as a negligible non-traditional sector with a narrow export base and by the year 1983 it emerged as a promising export earning sector; presently it contributes around 75 percent of the total export earnings. Over the past one and half decade, RMG export earnings have increased by more than 8 times with an exceptional growth rate of 16.5 percent per annum. In FY06, earnings reached about 8 billion USD, which was only less than a billion USD in FY91. Excepting FY02, the industry registered significant positive growth throughout this period. In terms of GDP, RMG’s contribution is highly remarkable; it reaches 13 percent of GDP which was only about 3 percent in FY91. This is a clear indication of the industry’s contribution to the overall economy. 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. A 1999 study found the industry supporting approximately USD 2.0 billion worth of economic activities (Bhattacharya and Rahman), when the value of exports stood at a little over USD 4.0 billion.

One of the key advantages of the RMG industry is its cheap labour force, which provides a competitive edge over its competitors. The sector has created jobs for about two million people of which 70 percent are women who mostly come from rural areas. The sector opened up employment opportunities for many more individuals through direct and indirect economic activities, which eventually helps the country’s social development, woman empowerment and poverty alleviation.

Management System of RMG

There is a managing committee to operate each garment. Managing director is the head of that committee and to help him there are different officers in different post.

Most of the time the Garments owner is the MD. MD manages his garment in his own way. the have no specific management system to operate the garments (Except some sector government policy have not for them to operate the garments). After receiving the order confirmation detail from the buyer, a fail maintain customer details. After than the commercial negotiate with the buyer and fixed the price. If Buyer accepts price Performa invoice ins sent and following steps are taken by the owner to maintain buyer order.

• Receive of order sheet/Litter of credit Lap Dip & approval from Buyer.
• File sample for Buyer for Buyer approval.
• Fabric Booking.
• Accessories Booking.
• Pre Production Sample- Sample selection.
• Cutting, Sewing, Finishing, Inspection.
• Commercial Department will process shipment.
• Documents & Export for materials.
• Negotiate documents with Bayer for payment.

In somewhere they follow the government role. But most of the sector they have no government role. So the owner of the garments manage their garments in their own way. After phased quota they are facing terrible challenge. Most of the time they thought about only their profit not workers affairs. Doing this the relationship between owner and workers became hot. The workers called Darmaghot. The production was hampered and the shipment was canceled. The owner faced a lot of problem such as-

• The shipment was canceled and the buyer refused to buy their production.
• To maintain the profit the owner try to reduce production cost and doing that they give the worker poor wages.
• They try to enter the chilled labour at a poor wages. Labour Law can not follow and the owner do not allow them to do trade union.
• Sometime they face some problem to open L/C in the bank and it is also a great problem to receive raw materials in time due to customs complexly or delay.
• The job security of the worker in RMG sector is not ensured. Because labor low & ILO convention to are not strictly followed.
• Majority of the workers have no appointment letter. So the owners enjoy the power of discharging or dismissing a worker from his job anytime.
• Though a wages structure for the workers has been made recently, but its not followed by to all the owners.
• The workers have no professional satisfaction.

There are a number of reasons such as, (i) They are not granted necessary for recreation. (ii) They are Poorly Paid. (iii) Some times they are not given bonus. (iv) There is hardly a daycare center for the children of workers. (v) Want of necessary cafeteria, hygienic sanitary system, active give management system an health facility.(vi) Very often female workers are disturbed or physical exploited by their male colleagues, authority or local miscreants, For this out women workers become victim of social humiliation. In many cares this issue maker their conjugal life unstable. (vii) The facility of training for the workers is very insufficient in RMG sector.

Government Policies

Recently the Govt. has taken some policies, which will also further argument the smooth growth of RMC sector.

(a)     Permission for importing gray fabric under back to back L/C by both dying and printing industries as well as by garment industries.

(b)     Permission for importing washing raw materials under back to back L/C.

(c)      Import of duty free capital machinery. And allowing the BGMEA to issue permission to import raw materials for the garment industries.

(d)     In 2005 “Social compliance forum for RMG” is established to improve working environment, to ensure safety and to give lawful facilities to the workers of RMG. The process of materializing the decisions undertaken by that forum is going on with the help of two issue-based task force-Task Force on Labour welfare in RMG & Task force on occupational safety in RMG -and CMC of EPB.

(e)      To ensure different Privileges of workers a treaty is signed among the owners of RMG, workers of RMG & the Govt. At present, 10 conditions as per the treaty are in process of being materialized. For example, (i) 15 teams and 13 teams formed by Labour and Employment Ministry & BGMEA respectively are working.

(f)      To ensure safety against fire and upgrade working environment of RMGs 13 teams formed by Home Ministry are visiting the RMGs.

(g)     The concerned Ministries or offices are working to ensure minimum wages as per the declaration of Wages Board.

The minimum wages rate of the garments workers is mentioned below:

The minimum wages rate for the garments workers of different ranks, 2006. Source: Bangladesh Labour Law, 2006.

(h)     20 crore has been allocated in the budget of FY 2005-06 for the purposes of creating employment through alternative training in different areas if workers loose their jobs due to negative impact in the quota free regime.

(i)      The following Articles of “Bangladesh Labour Law, 2006” Support the cause of workers:

• The owner cannot retrench a worker without notice who has worked continuously a year. Article 20.
• An adolescent worker must not work more than 5 hours a day and not above 30 hours per week. In addition, he/she can work total 36 hours (including over time duty) per week, not more than that, iii. Articles 45 to 49 deals with maternity leave and some other facilities that a female worker will be allowed to enjoy at pregnancy period.
• Articles 51 to 60 deal with health management. Specially cleanliness (article 51), proper ventilation system and ideal temperature (article- 52), removal of dust & smoke (article 53), necessary light (article-57), pure drinking water (article-58), proper sanitation system (article-59) & wastage box (article-60) must be ensured by the owners.
• Articles 61 to 78 focus on security system. For instance, to ensure security of the workers cautious measures against dangerous smoke & fire, strong and firm lift, wide floors & stairs etc are essential.
• A plan has been taken to child labour totally form SAARC countries within 2010.

Research Findings

(i)      The main challenge faced by the RMG sector of BD is production problem. Due to short supply of local fabrics and accessories, this sector could not handle production smoothly,

(ii)     Lack of skilled workers etc, arc the main factors for hampering production and delivery of goods.

(iii)    Due to Cumbersome custom formalities, delay in quota distribution, failure to deliver order in time, sudden change of order by the buyers, mischievous role of the buyers agents and etc., the RMG sector have been facing challenges in the marketing of their products. Except proper marketing a manufacturer can not operate his business smoothly.

(iv)    Another challenge encountered by the garment sector and BGMEA was the child labour issue which arose in 1994 when some major buyers mainly USA had threatened to boycott local garments on the issue of employment of child labour in garment factories.

(v)     For the development of smooth global marketing of garments, side by side with the expansion of garment industry in BD, the service of air express industry also developed.

(vi)    60% workers earn 1600-2000 tk. per month, 40% workers earn 1200-1600 tk. and only 10% workers earn above 2000 tk.

(vii)   None of the workers’ working hour is in consistent with Bangladesh Labour Law, 2006 or International Labour Law. Because everyday 30%, 60% and 10% of them work for 10 hours, 12 hours and above 12 hours respectively.

Recommendations

(i)      A training Institute with necessary facilities and support should be set­up to impart exclusive training on garments business. Bangladesh Management – Development Center (BMDC), Bangladesh Institute of Administration and Management (BIAM) and Textile Institute may offer certificate courses on different aspects of RMG though a fashion institute has been set up under BGMEA.

(ii)     Bangladesh need to restructure its textile and RMG industries with appropriate backward and forward linkages and improve substantially its labour productivity and efficiency. It must implement well-formulated cost reduction and product diversification strategies.

(iii)    The economic and social status of the garment workers should be upgraded, then it will have a tremendous effect of the production and consumption in the economy.

(iv)    The exporter should maintain all the rules and regulations and the quality of Bangladeshi RMG should be increase to survive in the global market.

(v)     Duty on garment spares should be reduced and the production cost should be minimized,

(vi)    The new wages-structure for the  garments workers must be  fully implemented as soon as possible.

(vii)   To improve working skill of the workers more training programmes should be arranged.

In the garments rehearsal of taking preventive step against fire should be held regularly so that no workers die being fire burnt in future.  To give health service to the workers the owners have to ensure  conducive working environment by facilitating strong lift, sufficient light, proper ventilation system, sanitation system etc. Each & every workers must be provided appointment letter and given relief from the fear of being retrenched any time. Thus their job security should be ensured. The workers must be given opportunity to participate in constructive Trade Union.

The Garment sector has tremendous impact on socio-economic structure of the country. It also brings economic prosperity for the poor women. We believe that there must be a saturation point for any industry. But for our garment industry, still we are away from it. With the conclusion of the Uruguay round of negotiations, the MFA was   phased out. We are in the free trade regime of the GATT. In that situation, without BD’s own fabrics, it would be very difficult for BD to even retain its present position in the quota free developed countries, not to speak of any further growth. A developing country like BD is expecting much more from the promising garment sector, the sector which assures job opportunity for the millions of unemployed and much needed foreign exchange earning for the country. After entering in a new Quota free market BD faced a big competition with many countries like China, Vietnam, Cambodia and some Caribbean countries where labour are very chief. So the manufacturers should keep it in their mind that without quality control, cost control and timely shipment they can never compete with the competitors and survive in the global market of RMG. So, they should be changed their management system for the well being of their garments. Again we should keep it in our mind that the workers employed in the Garment factories are given suitable wage and other facilities, the labour unrest might swallow up the industry wholly including the proprietors. Hence timely .and adequate action is to be taken for solving the problems with which the industry has now been plagued. The Govt. also is anxious to save the foreign exchange earning garment industries from falling into the clutches of dishonest trade union leaders who are a new breed of exploiters. If the garments sector collapses due to lack of policy support of the Govt. and manufacturers, the sector will lose the global market and Dhaka City would turn to a ghost city. As a result the total social stability will tumble as millions of people directly or indirectly make their living from the sector. The families, which depend on this sector for their existence, will be unseated from employment and deprived of their only means of survival.

Scenario of Garments Sector in Bangladesh

Advance wet processing technology, term paper on ar knitwear limited, effect of different parameters of weft knitted fabric, leucophoenicite: properties and occurrences, bodybuilding supplement, classifying triangles, select excel training courses, carbon nanotube, powdery mildew spreads globally due to migration and trade, latest post, metallization pressure, induction regulator, induction coil, a new global benchmark for cigs solar cells, crop plant asexual propagation becomes more feasible, inflatable building.